Aug 17 (Reuters) - Asian shares rallied on Wednesday as
strong earnings for U.S. retail giants suggested further room
for interest rate hikes from the Federal Reserve as it attempts
to cool inflation.
European equities looked set for early gains as well on a
data-heavy day, with British inflation and the final Euro zone
Q2 GDP reading expected. FTSE 100 futures were up 0.25%
and Euro Stoxx 50 futures were up 0.45%. S&P emini
futures were up 0.1%.
Japan's Nikkei rose 1.17% to 29,169.28 points,
breaking through the 29,000 barrier for the first time since
MSCI's broadest index of Asia-Pacific shares outside Japan
Stocks in New Zealand were flat and the kiwi dollar
gained 0.28% after the country's central bank announced a fourth
consecutive 50 basis point (bps) rate hike to 3.00% without
giving hints of slowing down.
Despite the hike being in line with forecasts, the
announcement was described as "definitely more hawkish than
expected" by Imre Speizer, head of NZ market strategy at
Westpac, who pointed to the tone of the RBNZ's statement and a
15 bps increase in its official cash rate (OCR) track to 4.10%.
"Clearly they're a bit more worried about wage inflation and
a very tight labour market, that's been a big recent
development," Speizer said.
Australia's AXJO index gained 0.27% and the Aussie
dollar mostly recovered early losses after wage data
showed growth slightly below expectations and well behind
Hong Kong's Hang Seng index rose 0.78% and Chinese
blue chips were up 0.6%.
The outlier in Asia was South Korea's KOSPI index,
which lost 0.76% to snap a three-day rally as automakers Hyundai
Motor and Kia Corp 000270.KS fell on new U.S.
legislation that ends tax credits for electric vehicles built
outside North America.
Overnight, the Dow Jones Industrial Average gained
0.71% and the S&P 500 gained 0.19% as Home Depot
posted higher than expected sales and Walmart increased
its profit forecast.
Investors now see a 42.5% chance of a third successive 75
bps rate hike at the Fed's next meeting in September, up from
39% the previous day.
"There has been very little notice or commentary about the
fact that expectations for 2023 Fed rate cuts have almost
disappeared recently," Nikko Asset Management chief global
strategist John Vail noted in an email.
"Indeed, whereas Fed fund futures once predicted cuts in the
first half, now a hike is partially priced in, while 2023 only
predicts less than one 25 bps cut. This is likely due to hawkish
Fed speeches rather than any change in the macro-economic
Minutes from the previous Fed meeting will be released later
in the day (1800 GMT), with investors hoping for more clues on
its policy tightening outlook.
U.S. retail trade data for July will also come out later in
the day, with investors watching for any signs of a recession.
"Retail sales should have been more resilient given that
lower prices at the pump improved the spending power of the
average American household, and Amazon Prime Day in the month
possibly attracted bargain hunters as well," wrote Saxo Bank
analysts in a note, while pointing to "modest" consensus
expectations of 0.1%.
Ten-year Treasury yields rose slightly and were trading at
2.8168%, having earlier wiped out an overnight rise to 2.8730%.
In commodities, Brent crude futures rose 1.2% to
$93.43 a barrel while U.S. West Texas Intermediate (WTI) crude
gained 1.3% to $87.65 per barrel.
Oil prices had fallen overnight to their lowest since before
Russia's invasion of Ukraine in late February, with markets
speculating on Iran's response to a proposal to revive the 2015
nuclear deal, which could increase Iranian oil exports.
Spot gold rose 0.3% to $1,780.95 an ounce, while
bitcoin rose 0.77% to $24,148.33. The leading cryptocurrency
spiked to a two-month high of $25,201.93 over the weekend but is
down 4.12% since then.
(Reporting by Sam Byford in Tokyo; Editing by Kim Coghill)