Asian stocks weak, US dollar shines as December rate hike view unchanged

The Shanghai Stock Exchange Composite Index is displayed on an electronic stock board outside a securities firm in Tokyo.
The Shanghai Stock Exchange Composite Index is displayed on an electronic stock board outside a securities firm in Tokyo. PHOTO: BLOOMBERG

HONG KONG (REUTERS) - Asian stocks held near three-week lows and the greenback consolidated recent gains on Thursday (Oct 13) after minutes of the last US Federal Reserve policy meeting indicated a December rate increase was still on the cards.

Risk appetite waned, with MSCI's broadest index of Asia-Pacific shares outside Japan easing 0.2 per cent, its lowest since Sept 21. Early stock markets were mixed with Australia down 0.5 per cent while New Zealand stocks were up 0.4 per cent.

"In our view, if you came into these minutes with a December hike pencilled in, there is no reason to change your stance,"Omair Sharif, an economist at Societe Generale, wrote in a note.

Wall Street struggled to find fresh momentum after breaking conclusively below a 100-day moving average this week.

The Dow Jones industrial average closed up 0.09 per cent, to 18,144.2. The S&P 500 gained 0.11 per cent, to 2,139.17 and the Nasdaq Composite slipped 0.15 per cent, to 5,239.02 with corporate earnings firmly in focus. Volumes were light.

Chinese stocks and the Australian dollar will be firmly in focus with trade data due shortly. Economists will be watching the trade breakdowns carefully to see whether the yuan's recent weakness has had a beneficial impact.

The CBOE Volatility Index, the "fear gauge" of near-term investor anxiety held below 16, indicating broader market uncertainty.

Elsewhere, sterling treaded water after British Prime Minister Theresa May's offer to give UK lawmakers a say in plans to leave the European Union and the US dollar basked in the glow of a likely widening interest rate differential in its favour relative to other currencies.

Within Asia, the Thai baht will be in focus after falling to a eight-month low in the previous session on concerns about the health of 88-year-old King Bhumibol Adulyadej.

Oil prices struggled after falling 1 per cent overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group's pledge to restrict output.

US West Texas Intermediate crude slipped 0.62 per cent to trade at US$49.87 a barrel. Gold stabilised around the US$1,250 per ounce level after falling sharply last week.