Asian markets firmer as focus turns to FOMC from Greece

Thursday, 26 January 2012 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: Asian shares rose on Wednesday, underpinned by strong earnings from U.S. technology giant Apple, stabilising European money markets and falling euro zone debt yields, with investors shifting their focus to the Federal Reserve from Europe.

The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.4 percent while Australian shares firmed and the Australian dollar ticked up after data showed the nation’s fourth-quarter headline consumer price index was unchanged on the quarter against a rise of 0.2 percent forecast.

Japan’s Nikkei average .N225 reached a three-month high and was last up 0.5 percent, encouraged by a jump in Apple (AAPL.O), which reported quarterly results far exceeding analysts’ expectations.

Some Asian markets reopened on Wednesday but China and Hong Kong remained closed for the Lunar New Year holiday.

Worries about Greece possibly facing a disorderly default still tempered active risk-taking, keeping the euro below a three-week high hit on Tuesday.

But expectations for a prolonged period of ultra-low U.S. interest rates and recent resilience in global stocks and the euro despite stumbling talks over Greece’s bailout may strengthen downward pressure on the dollar this session, said Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo.

“Europe remains a concern every day but for today, the focus is on the FOMC. The Fed suggesting the possibility of a prolonged period of super-low rate environment could highlight the dollar’s relative weakness in light of a recent trend of improving sentiment,” he said.

The U.S. Federal Reserve ends its two-day policy meeting later on Wednesday, the first of 2012, and it will start a new practice of announcing policymakers’ interest-rate projections.

The euro was steady around $1.3033, easing from a three-week high of $1.3063 hit on Tuesday. The yen hovered near a one-month low against the dollar of around 77.85 hit on Tuesday.

The yen reacted little to Japan’s trade data which showed the country logged an annual trade deficit in 2011 for the first time in 31 years, as expected, with last year’s earthquake and tsunami, weak global demand and a strong yen battering exports.


Greece kept hopes alive for a last-minute bond swap deal to avoid a messy default after euro zone officials sent talks back to square one by rejecting a final offer from the country’s private bondholders.

Greece’s private creditors also sought to salvage the talks, pleading with European officials to hammer together a deal before Athens tumbles into a chaotic default.

Without aid, Athens will not be able to pay back 14.5 billion euros in maturing bonds in March, unsettling the euro zone’s financial system and potentially hurting the global economy.

Despite the debt crisis, data suggested the euro zone may avoid a recession.

Markit’s Flash Eurozone Purchasing Managers’ Composite Index (PMI), a gauge of overall economic performance, showed the euro zone’s economy grew in January for the first time since August, confounding forecasts for a contraction.

Factors which have supported sentiment recently remained intact.

Money market rates were treading lower, with more focus on the positive effects from the European Central Bank’s ample funding operations aimed at easing a credit crunch in Europe and encouraging investors to buy debt, especially short-term maturities, from highly-indebted euro zone countries.

Spanish sale of three- and six-month debt on Tuesday met strong demand, driving down yields sharply to multi-month lows.