Asian shares near nine-month peak, dollar shines

Asian shares held near nine-month highs on Monday as worries over the impact
of Britain’s Brexit vote
eased amid efforts to maintain growth, while the dollar was buoyed by a run of
solid U.S. economic data.

Policy makers from the Group of 20 countries agreed to work to support global
growth and better share the benefits of trade, in a weekend meeting dominated by
the impact of Britain’s exit from Europe and fears of rising protectionism.

MSCI’s
broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent to stand
just below its nine-month peak hit on Thursday. Japan’s Nikkei rose 0.4 per
cent.

U.S. stock prices marked four straight weeks of gains last week, supported by
renewed strength in the tech and telecom sectors and a stronger-than-expected
report on manufacturing.

The S&P 500 set another record closing high on Friday.

“At the moment, U.S. markets are attracting global funds. Globally there
remain risks, such as European financial institutions or the Chinese yuan,” said
Koichi Yoshikawa, executive director of finance at
Standard Chartered Bank in Tokyo.

“We have to see if investors are ready to diversify to other markets than the
U.S. in coming weeks,” he added.

The strength of U.S. economic data in recent weeks has revived speculation
that the Federal Reserve may raise interest rates around the end of year.

Dollar interest rates futures, which had priced out any chance of a rate hike
this in the days that followed the UK referendum, are now pricing in about a 40
per cent chance of a 0.25 percentage point increase by the end of year.

That is boosting the relative attraction of the dollar in the currency
market.

The dollar’s index against a basket of six major currencies hit a 4-1/2-month
high of 97.543 on Friday and stood at 97.426 in early Monday trade.

As the dollar gains, the euro has been put on back foot, trading at $1.0970.
The single currency hit a one-month low of $1.09555 on Friday.

The British pound is also under pressure after surveys showed on Friday
business activity had wilted in the wake of the Brexit vote.

The pound traded at $1.3141, near last week’s low of $1.3065.

The yen traded at 106.23 per dollar, off last week’s six-week low of
107.49.

The yen showed limited response to comments from Bank of Japan Governor Haruhiko Kuroda on the
sidelines of the G20 meeting.

Kuroda said
he would ease policy further if necessary to achieve its 2 per cent inflation
goal, but also said there was no discussion on “helicopter money” – a radical
policy of expanding fiscal stimulus financed by printing money.

Oil prices hovered near 2-1/2-month lows after having lost about 4 per cent
last week on renewed worries about a global crude glut.

Brent crude futures traded at $45.83 per barrel, near Friday’s low of $45.17,
its lowest since May 11.

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