Monday 04.10 BST. Ahead of a big week for global monetary policy, stock markets across Asia edged higher as investors returned from long weekends, although trading in Australia was complicated by technical problems.
Hong Kong’s Hang Seng was up 0.6 per cent after a three-day weekend, while China’s Shanghai Composite gained 0.5 per cent and the tech-focused Shenzhen Composite added 0.8 per cent. The two mainland benchmarks traded for the first time since Wednesday, owing to the mid-autumn festival public holiday.
Australia’s S&P/ASX 200 was down 0.3 per cent, however the exchange still appeared to be suffering problems after the market open was delayed by 90 minutes due to technical problems.
Brokers said that even after the market opened at 11.30am Sydney time, a number of stocks — including heavyweight banks ANZ Banking Group, Commonwealth Bank and the exchange operator itself, ASX — took longer to come online.
That left an unexpectedly large vacuum of activity early in Asia early on Monday with the Japanese market closed for a public holiday.
The interruptions come at a difficult time for investors, who are turning their attention to Thursday’s highly-anticipated central bank double-header from the Bank of Japan and US Federal Reserve.
Data on Friday showed US core consumer price inflation in August was stronger than expected, pushing the needle back towards a possible September rate rise and underpinning gains for the dollar and a sell-off in Treasuries. The S&P 500 finished 0.4 per cent weaker on Friday.
However, there is a high degree of scepticism among economists that the Fed will boost rates on Thursday given that other recent data have been on the soft side.
“We continue to forecast the next move in December,” said Michael Feroli, chief US economist at JPMorgan. “Developments over the past week reinforced our view that a rate hike at the September meeting is unlikely. The economic data continue to underwhelm and we do not think the Fed has made an effort to explicitly guide expectations toward a September hike.”
The US dollar was down 0.2 per cent on Monday at 95.883, having jumped 0.9 per cent on Friday, the most since late June. Gold, which is sensitive to monetary policy expectations, was 0.5 per cent stronger on Monday at $1,316.55 an ounce, having fallen roughly one-third of one per cent at the end of last week.
Hedge funds became net sellers of the US dollar last week as data did not suggest a September rate rise, analysts at ANZ Banking Group said of data from the Commodity Futures Trading Commission. The funds reduced their net long dollar positions by $1.7bn to $7.8bn, but the cut off for the weekly survey fell before the release of Friday’s CPI data.
In the case of the BoJ, “the uncertainly over what, if anything, they will do means that the decision itself should be what carries the day”, said Ray Attrill at National Australia Bank.
In a quiet market, the yen was trading 0.2 per cent stronger at ¥102.06 per dollar.
The Australian dollar, up 0.6 per cent at $0.7534, was the best-performing Asian currency on Monday, boosted by a reiteration from Philip Lowe, who officially took over today as governor of the Reserve Bank of Australia, that the central bank would stick with its inflation targeting framework. The market has interpreted that as a sign that the RBA might be reluctant to cut interest rates further from their record low level of 1.5 per cent.
Also underpinning the Australian dollar, which is often regarded as a proxy for Chinese growth, were data showing residential property prices in China’s large cities rose at a healthy pace in August.
Oil prices rebounded on Monday, recovering Friday’s decline. Brent crude, the international benchmark, was up 1.8 per cent at $46.59 a barrel while West Texas Intermediate gained 1.9 per cent to $43.85.
For market updates and comment follow us on Twitter @FTMarkets
Sample the FT’s top stories for a week
You select the topic, we deliver the news.