Shares in Japan and China rose Monday as the dollar’s strength lifted the outlook for their exporters but other Asian shares were listless as investors increasingly factored in a December Fed rate cut.
Japan’s benchmark Nikkei 225 index rose 0.7 percent to 18,099.04 and the Shanghai Composite Index added 0.6 percent to 3,213.19. However, South Korea’s Kospi dipped 0.2 percent to 1,970.77 while Hong Kong’s Hang Seng edged up 0.1 percent to 22,367.36. Australia’s S&P/ASX 200 slipped 0.2 percent to 5,351.30. Taiwan’s benchmarks rose but those in Singapore, Indonesia and the Philippines sagged.
Chinese authorities set the yuan’s official “parity rate,” known as the fix, for the country’s tightly controlled currency 189 basis points lower to 6.8985 against the dollar. It’s the 12th day in a row Beijing has guided the yuan lower, amid suspicions that Beijing is willing to let the currency weaken to help exports. The yuan, also known as the renminbi, hasn’t been this weak since the depths of the global financial crisis in 2008. The currency’s decline has quickened after Donald Trump’s U.S. election victory. He has vowed to brand China a currency manipulator as part of measures to counter what he says are unfair trade practices.
The dollar has also been rising against other major world currencies as investors increasingly factor in a Fed rate hike in December based on comments last week from U.S. central bank policymakers. The greenback’s nearly 7 percent gain against the yen in the past week has helped boost Japan’s major exporters, which benefit because their overseas profits can be converted into more yen. Trump’s campaign promises to boost the U.S. economy by ramping up government spending and cutting red tape has lifted the dollar but investors continue to wait for concrete details.
“Traders are positioning for another USD leg higher, despite concerns that we are nearing a near-term pinnacle from the USD positivity of Trump mania,” said Stephen Innes, senior trader at Oanda, adding that Chinese central bank might not be willing to let the yuan weaken past 7.0 to the dollar. “Up until now, the People’s Bank of China has been unperturbed about the sliding yuan, but may be concerned about the rapid pace of the depreciation enough to “pump the brakes,” he said.
Major U.S. stock indexes ended slightly lower on Friday. The Dow Jones industrial average slid 0.2 percent to 18,867.93. The Standard & Poor’s 500 index lost 0.2 percent to 2,181.90. The Nasdaq composite touched a record high early on but then ended 0.2 percent lower at 5,321.51.
The dollar climbed to 111.03 yen from 110.92 yen in late trading Friday. The euro edged up to $1.0603 from $1.0589.
Benchmark U.S. crude extended gains. Oil futures rose 60 cents to close at $46.96 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 27 cents to close at $45.69 a barrel on Friday. Brent crude, which is used to price international oils, added 62 cents to $47.48 a barrel in London.