Asian Shares Meander, Tracking Wall Street's Mixed Finish as Dollar Surges

Shares were mixed in Asia on Thursday after a lackluster finish on Wall Street following a report showing an uptick last month in inflation in the US.

The dollar was trading at 156 Japanese yen, up from 155.49 yen, reflecting expectations that the dollar will gain against other currencies under the policies anticipated with the incoming administration of President-elect Donald Trump.

Japan's Nikkei 225 index edged less than 0.1 per cent higher, to 38,754.50 and the Kospi in South Korea advanced 0.5 per cent to 2,429.23. Australia's S&P/ASX 200 gained 0.4 per cent to 8,223.20.

Chinese markets declined, with the Hang Seng in Hong Kong falling 0.9 per cent to 19,649.91. The Shanghai Composite index lost 0.3 per cent to 3,428.37.

Bangkok's SET lost 0.2 per cent and Taiwan's Taiex fell 0.5 per cent, while the Sensex in India edged 0.1 per cent higher.

A stronger dollar tends to put strain on other economies, noted Stephen Innes of Capital Economics. The Thai baht has also weakened against the dollar since the US election, as has the Chinese yuan, or renminbi, which now stands at 7.2245 per dollar and was trading at about 7 yuan per dollar in early October.

“For Asia, particularly those economies closely linked to China, the dollar's dominance is poised to become an economic wrecking ball,” he said in a commentary. “Countries with hefty USD-denominated debt are bracing for impact,” he added.

On Wednesday, US stocks drifted to a mixed finish after the latest inflation update boosted hopes that a cut to interest rates next month will bring more help for the economy.

The S&P 500 was nearly unchanged, gaining 1.39 points to 5,985.38, up less than 0.1 per cent. It was its first loss since a big rally erupted after the November 5 Election Day. The Dow Jones Industrial Average added 0.1 per cent to 43,958.19, and the Nasdaq composite slipped 0.3 per cent to 19,230.74.

US consumer inflation accelerated in October to 2.6 per cent from 2.4 per cent, but an underlying measure called “core inflation” did not rise. Such core inflation can be a better predictor of future trends, economists say, so the figures added to expectations for more help from the Federal Reserve.

The Fed began cutting interest rates from their two-decade high in September to keep the job market humming after bringing inflation nearly all the way down to its target of 2 per cent. It cut again earlier this month, and traders now see an improved probability of roughly 80 per cent for a third cut at its meeting next month, according to data from CME Group.

Those expectations sent the yield for the two-year Treasury down to 4.27 per cent from 4.34 per cent late Tuesday. The yield on the 10-year Treasury, which also takes future economic growth more into account, rose to 4.45 per cent, up from 4.43 per cent late Tuesday.

But Trump's victory in the presidential election has raised uncertainty over the Fed's future course. Economists say his preferences for lower tax rates, higher tariffs and less regulation could ultimately lead to higher US government debt and inflation, but also bring faster economic growth.

While lower interest rates can give a boost to the economy and to prices for investments, they can also fuel inflation.

Rivian Automotive jumped 13.7 per cent after the electric-vehicle company gave more details about a joint venture it's entering with Volkswagen Group that they had previously announced. The deal's total size could be worth up to USD 5.8 billion, which is more than the USD 5 billion the companies had previously said.

Spirit Airlines' stock lost 59.3 per cent after it said in a regulatory filing that it's trying to work out a deal to renegotiate the repayment of its debt that might wipe out the company's stockholders, but could protect employees and customers.

In the crypto market, bitcoin was tracing at USD 90,300 after crossing above USD 93,000 as cryptocurrencies generally soared. Trump has embraced cryptocurrencies, pledging to make the US the crypto capital of the world.

Dogecoin, a cryptocurrency that's been a favourite of Tesla's Elon Musk, also gave up some of its gain from earlier in the day. Trump named Musk as one of the heads of a “Department of Government Efficiency,” or DOGE for short.

In other dealings early Thursday, US benchmark crude oil shed 37 cents to USD 68.06 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gave up 29 cents to USD 71.99 per barrel.

The euro fell to USD 1.0548 from USD 1.0587. (AP)