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Asian tech stocks rally, yen gains on Fed minutes

Sydney - Most Asian stocks rose, led by technology shares after stellar earnings at Internet giant Tencent. The yen climbed and the dollar extended declines after Federal Reserve meeting minutes reduced the odds of another US interest rate increase this year. The weakened dollar saw the South African rand gain, trading at R13.1752 to the dollar at 07:45.

Shares in Japan and Australia swung between gains and losses, while they advanced in South Korea. The Australian dollar added to an advance seen in the wake of a rally in base-metal prices that propelled zinc through $3 000. Australian government bond yields tracked a retreat in US yields after the latest Fed minutes showed debate among policy makers about whether higher rates are need given inflation remains benign. The swaps market sees a reduced chance for a December US interest-rate hike.

The tumult that swept markets in the wake of heightened tensions between the US and North Korea last week has eased, bringing down gauges of equity and bond volatility and repairing most of the damage done to stock markets. Investors continue to keep an eye on Washington where President Donald Trump disbanded two high-profile business advisory councils following the fallout from his response to the weekend violence in Virginia.

Attention will now turn to the European Central Bank, which is due to release minutes of its last policy meeting on Thursday, amid signs the euro-area economy gathered pace in the second quarter. Policy makers have signalled that they are getting closer to phasing out quantitative easing. Meanwhile, Reuters reported that ECB President Mario Draghi won’t deliver a fresh policy message at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming later this month.

In economic news out of Asia, Australian employers added 27,900 jobs in July from June, beating economists’ forecasts of a 20,000 gain. Japan posted a trade surplus for a second consecutive month in July as exports continued to grow, while imports surged again as domestic demand continues to recover.

Earnings at China’s Internet giants will stay in focus. Tencent posted its fastest revenue growth in seven years and record profit that surpassed estimates by 35%, sending its US-traded shares up more than 6%. Alibaba’s up next, set to report first-quarter results before the start of New York equity trading on Thursday.

Here are the main moves in markets:

Stocks

The MSCI Asia Pacific Index added 0.6% with a subindex of technology stocks up 1.3%. Japan’s Topix index swung between gains and losses. Australia’s S&P/ASX 200 Index was little changed and South Korea’s Kospi index climbed 0.5%. In Hong Kong, the Hang Seng Index was little changed even as Tencent jumped 3.7%. Futures on the S&P 500 Index slipped 0.1% as of 12:33 in Tokyo. The underlying gauge finished up 0.1%, down from its session high. The MSCI All-Country World Index increased 0.3% on Wednesday.

Currencies

The Bloomberg Dollar Spot Index fell 0.1%, extending the 0.4% slide on Wednesday. The yen rose 0.3% to 109.91 per dollar, extending Wednesday’s 0.4% advance. The Aussie added 0.1% to 79.34 US cents, pulling back from the session’s high after full-time employment dropped in July. The currency surged 1.3% after the Fed minutes sent the US dollar lower. The euro rose 0.1% to $1.1776, adding to a 0.3% gain on Wednesday.

Bonds

The yield on 10-year Treasuries was at 2.23% after sliding five basis points overnight. Australian government notes with a similar maturity saw yields slip three basis points to 2.64%.

Commodities

West Texas Intermediate crude added 0.3% to $46.91 a barrel, after falling 1.6% on Wednesday. Gold increased 0.3% to $1,286.98 an ounce after rising 0.9% Wednesday. Metals extended a rally spurred by Chinese demand and tightening supplies. Zinc was up 0.3% to $3,128.50 a ton after rising 5.4% on Wednesday. Copper rose 0.2% after jumping 2.4% on Wednesday.

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
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Rand - Yen
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Palladium
1,011.50
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Gold
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Silver
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