Asian shares track Wall Street higher, US dollar hobbled

SYDNEY (REUTERS) - Asian shares edged ahead on Monday (Feb 6) as Wall Street gathered momentum into a busy week of earnings with more than 100 major companies due to report, while the US dollar was again hobbled by a lack of progress on US fiscal stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.3 per cent, with Australia ahead by 0.5 per cent.

Japan's Nikkei rose 0.7 per cent in the wake of a firmer finish on Wall Street. Japanese Prime Minister Shinzo Abe meets US President Donald Trump on Feb 10 and 11, with trade and currencies likely to be on the agenda.

Dealers were still absorbing Friday's surprise move by China's central bank to raise short-term interest rates.

While the increases were modest, they suggested Beijing was intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fuelled stimulus.

It was the first move in the repo rate since October 2015. "This change is ground-breaking and suggests that the central bank will change onshore rates more frequently," wrote analysts at ANZ in a note. "The bottom line is to prevent a cash crunch amidst deleveraging and deflating financial bubbles in certain sectors."

On Wall Street, banks had ended Friday strongly as President Donald Trump moved to roll back regulations intended to prevent a repeat of the global financial crisis.

JP Morgan Chase shares closed up 3.1 per cent and helped push the S&P bank index up 2.6 per cent. The Dow rose 0.94 per cent, while the S&P 500 gained 0.73 per cent and the Nasdaq 0.54 per cent.

Friday's payrolls data also showed US jobs jumped more than expected in January as construction firms and retailers ramped up hiring, but wages growth still slowed.

"All in all a very mixed payroll report, with the breakdown tending to validate the latest Fed message of a gradual tightening and no need to rush into a hike at the next meeting," said Deutsche Bank's global head of forex Alan Ruskin.

"This data plays to the idea that there may be an extended gestation period both for easier US fiscal policy and tighter monetary policy."

Fed fund futures show only a slim chance of a hike in March and a Reuters poll of primary dealers found none expected a move before the second quarter.

That cautious outlook kept the dollar marginally softer at 112.55 yen having lost 2.3 per cent last week in its worst weekly performance since late July.

The euro was a fraction firmer at US$1.0782 while the dollar dipped against a basket of currencies to 95.720.

In the commodities market, spot gold was 0.1 per cent higher around US$1,221.00 an ounce.

Oil prices edged up after the United States imposed sanctions on some Iranian individuals and entities, days after the White House rebuked Tehran for a ballistic missile test.

US crude futures added 7 cents to US$53.90, while Brent gained 8 cents to US$56.89 a barrel having rallied 2 per cent last week.