Financial Institutions Lead Gains in Asian Shares
Equity markets in Asia were higher early Thursday, with finance stocks broadly leading gains after all major U.S. financial institutions received approval from the Federal Reserve to ramp up dividend payouts and share buybacks.
The approvals--the first time since the annual tests began in 2011 that all firms got passing grades--reflect a turning point for big financial institutions that have been shackled by tighter regulation since the crisis.
That move paves the way for U.S. banks to increase dividend payouts and share buybacks to their highest levels in years, providing investors with confidence to invest in high-growth assets like technology stocks.
Australia's S&P/ASX 200 advanced 0.9% on Thursday, building on its largest one-day gain in two weeks on Wednesday. Stocks of large banks were among the big gainers, with Macquarie Group rising 2.1%, National Australia Bank rising 1.8% and WesPac gaining 2%.
Meanwhile, Hong Kong's Hang Seng Index was up 0.8%, led by strength in banking giant HSBC, which surged 3.7%. Standard Chartered gained 3.2%.
An indication of improved investor sentiment was rising crude-oil prices despite inventory data showing an increase in U.S. stockpiles. The front-month futures for Brent crude, the international benchmark, gained 0.3% in Asia.
"You know you are back in a market with a bullish bent when [U.S. oil-inventory data] is ignored," said Greg McKenna, chief market strategist at AxiTrader.
Japan's Nikkei Stock Average was up 0.5% despite giving up some early gains on a stronger yen. The dollar was down 0.1% at 112.22 yen, tracing back on early gains.
The U.S. dollar broadly extended earlier declines in midmorning Asian trade, with the euro and the pound gaining 0.3% against the greenback. Overnight, the dollar pulled back in New York action, sending the WSJ Dollar Index--a broad gauge of the currency's value--to its second-lowest level of the year.
The dollar's decline came as central bankers from Europe, the U.K. and Canada have hinted this week that they are moving closer to withdrawing their massive stimulus programs.
Analysts said there was also speculation that weak inflation in the U.S. would stay the Fed's hands in raising rates, stemming the dollar's gains.
"The markets are inclined to believe that the Fed is likely to be on hold," said Sean Callow, a senior strategist at Westpac in Sydney.
Meanwhile, overnight gains in U.S. technology shares are also lifting shares of their key Asian counterparts on Thursday.
Korea's Samsung Electronics rose 0.8%, with SoftBank Group gaining 1.1% in Tokyo and Hong Kong index heavyweight Tencent rising 0.7%.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
June 29, 2017 00:01 ET (04:01 GMT)