Prices had topped $50 a barrel for the first time this year
Prices had topped $50 a barrel for the first time this year on Thursday after production disruptions in Canada as well as unrest in Nigeria.
HONG KONG, May 30, 2016 (AFP) – Tokyo stocks led Asia higher Monday, boosted by hopes the government will delay a sales tax hike and by a weaker yen after Federal Reserve boss Janet Yellen hinted that a US interest rate increase was looming.
Yellen said Friday she believed growth and the strengthening of the labour market would continue, and in that case, “probably in the coming months such a move would be appropriate”.
That timeframe, which other Fed policymakers have also referred to in recent weeks, would put the Fed’s action at its June 14-15 or July 26-27 meeting.
The US central bank has repeatedly stated its intention to continue raising rates this year after December’s first hike in nine years.
“Janet Yellen’s remarks on Friday confirm that at least one increase in the Fed rate is likely this year,” Ric Spooner, chief market analyst at CMC Markets, said in an email commentary.
“Traders will take confidence from the fact that stock markets are firm in the face of this confirmation. As far as the markets are concerned, the timing of the next Fed increase now becomes the central issue.”
Tokyo led the charge in Asia, ending up 1.4 percent and above 17,000 points for the first time in a month as the dollar surged against the yen. Hopes the government would delay a consumption tax hike also powered shares higher.
The dollar rose to 111.15 yen in Asian trading from 110.37 yen Friday in New York — the yen’s weakest level in about a month. A weaker currency is good for exporters as it inflates the value of their overseas profits.
Media reports over the weekend said Prime Minister Shinzo Abe had told his close aides that he intends to push back a sales tax increase to October 2019 on fears it could damage the already fragile economy.
– Oil dips in Asia trade –
Hong Kong rose 0.3 percent, while Shanghai and Sydney were flat. Seoul shed 0.1 percent, but Jakarta and Taipei gained 0.5 and 0.9 percent respectively.
Meanwhile, China’s central bank on Monday set the value of the yuan currency at a more than five-year low of 6.5784 to the US dollar, according to the national foreign exchange market, in a pattern of weakness in anticipation of higher US interest rates.
European equities trading was lacklustre given that London was closed for a bank holiday.
Frankfurt climbed 0.2 percent around midday, with traders looking ahead to the afternoon release of inflation data.
Germany weighs heavily on the consumer price developments in the eurozone as a whole, and the data comes ahead of a monetary policy of the European Central Bank on Thursday.
Ultralow inflation has prompted the ECB to maintain interest rates at low and even negative levels and pump billions in stimulus into the eurozone economy to avoid falling prices and boost growth.
The CAC 40 in Paris dipped 0.02 percent despite the first quarter growth rate for the French economy being revised up by a tenth of a percentage point to 0.6 percent.
An increase of 1.5 percentage points in the French reading on the EU’s Economic Sentiment Indicator, also failed to budge the CAC.
With US exchanges also closed for Memorial Day, analysts at brokerage Aurel BGC said that “the week will really get underway on Wednesday with Chinese PMI and the US manufacturing ISM”, two key surveys of companies used as gauges of economic activity.
Oil prices dipped on the stronger dollar, with North Sea Brent for July dropping 24 cents to $49.08 while US benchmark West Texas Intermediate for July delivery fell 13 cents to $49.20 a barrel in Asian trading.
A stronger greenback makes dollar-priced oil more expensive, denting demand and hurting prices.
Traders are now looking to the June 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, where it is hoped a deal on reducing production can be reached.
Prices had topped $50 a barrel for the first time this year on Thursday after production disruptions in Canada as well as unrest in Nigeria.
