Stocks in South Korea soared to a fresh high Thursday, leading broad gains across the region after the nation's central bank held interest rates at a record-low in a vote of confidence in the economy.
The Kospi Index was last up 0.9%, with gains accelerating after the Bank of Korea's decision Thursday morning to hold rates at 1.25% for a 10th straight meeting. South Korea's stock market has been on a roll, hitting record highs as strong local corporate results and economic optimism propelled gains.
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"Looking ahead, we doubt a rate change will come onto the agenda any time soon," said Krystal Tan, Asia economist at Capital Economics. "With the economy showing signs of improvement, there is no urgency for rate cuts."
Equities elsewhere in the Asia-Pacific region also rose, as the latest U.S. Federal Reserve minutes hinting at a June interest-rate increase were no surprise to the market.
Investors were also positioning themselves ahead of the meeting of the Organization of the Petroleum Exporting Countries, due to begin later in the global trading day.
The Nikkei Stock Average was up 0.4% in afternoon trade, with a stronger yen capping earlier gains after a fall in the dollar overnight following the Fed minutes. The dollar has since recovered, with the yen recently down 0.1% against the greenback.
Elsewhere, the Taiex in Taiwan rose 0.5% to a fresh 17-year high, while Australia's S&P/ASX as up 0.1%.
The Fed minutes (http://www.marketwatch.com/story/seeing-another-rate-hike-soon-fed-outlines-plan-to-reduce-bond-holdings-minutes-show-2017-05-24) were "not so different than what market expected," said Yujiro Goto, global FX strategist with Nomura. The likelihood of a June rate rise was at 83.1%, versus 78.5% on Wednesday, according to data from CMEGroup.
Meanwhile, Hong Kong equities largely ignored the investment rating downgrade late Wednesday by Moody's Investors Service, mirroring a move earlier in the day by the ratings company on China. Nonetheless, Moody's changed the outlook for Hong Kong to stable from negative. The Hang Seng Index was up 0.6% at the midday break to a 22-month high.
In China, stocks were mixed following the previous session's swings in the wake of Moody's downgrade. The Shanghai Composite Index added 0.4%, while the Shenzhen main board extended losses to decline 0.7%, underscoring weakness in smaller cap stocks even as large blue chips remain relatively resilient.
The concentrated flow of funds into financial heavyweights reflects low risk appetite as margin debts dropped to a three-month low. The tech-stock-concentrated ChiNext board--once sizzling hot--was down 1.3%, the weakest level since February 2015.
Additionally, the onshore Chinese yuan abruptly surged late morning, to a level 0.3% above Wednesday's close, before pulling back some. The move came amid a broader pullback in the dollar, but the yuan's jump attracted attention since the currency is tightly controlled.
In commodities, oil prices rebounded from losses the previous session as OPEC officials in Vienna suggested output cuts could be extended into next year. Brent, the global crude oil benchmark, was 0.8% higher in Asia.
Among individual oil stocks, Hong Kong-listed Sinopec (600688.SH) was up 0.6% and Australia's Woodside Petroleum (WPL.AU) added 1.1%.
In Singapore, revised estimates released Thursday showed the city-state's first-quarter gross domestic product contracted 1.3% on a seasonally adjusted and annualized basis from the previous quarter. This was less than previously estimated for the three-month period, helped by strength in manufacturing and construction. The country's benchmark index was last up 0.3%.
Embattled commodity trader Noble Group (CGP.SG) rose in Singapore after five sessions of declines saw a further 45% slashed from the firm's market value amid liquidity concerns. Shares were last up 13%, but analysts remain cautious.
"For those thinking of picking up bargains here, be fully aware that the obscurity surrounding Noble's outlook is further under the blanket," said Nicholas Teo, a trading strategist at KGI Securities.
(END) Dow Jones Newswires
May 25, 2017 01:25 ET (05:25 GMT)