Asian equities edge higher, turn positive for the year

Asian shares edged higher on Friday, turning positive for the year, while the US dollar weakened broadly after the Federal Reserve’s cautious stance on further rate increases prompted investors to rebuild their bets on riskier assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent in early trade, entering positive territory for the year for the first time during Asian hours.

That echoed a recovery on Wall Street, where the S&P 500 Index gained 0.66 percent to close at its highest since December 31, led by the materials and energy sectors. Japanese shares bucked the trend as the dollar’s fall against the yen is seen hurting the country’s exporters, with the Nikkei dipping 0.4 percent.

The US dollar extended its broad slide triggered by Wednesday’s Federal Reserve statement showing the US central bank would raise rates at a slower pace than its previous forecast.

“The Fed was dovish in every respect. Its policy statement, comments from (Fed Chair Janet) Yellen and its economic projections,” said Shuji Shirota, head of macro economics strategy group at HSBC in Tokyo.

The dollar’s index against a basket of six major currencies fell to a five-month low of 94.65 on Thursday. It last stood at 94.796. The euro scaled a five-week high of USD 1.1342 and fetched USD 1.1318 in early Asian trade.

The yen hit a 16-1/2-month high of 110.67 to the dollar and last traded at 111.38 yen. Even the British pound, which has been dogged by worries about “Brexit” from the European Union, rose to a one-month high of USD 1.4504.

The Australian dollar shot up to USD 0.7660, its highest in 8-1/2 months, helped by a recovery in commodity prices. Oil prices soared, with US crude surging 5 percent on Thursday to pierce the USD 40 barrier, as the market was propped up by optimism that major producers may strike an output freeze deal next month.

OPEC kingpin Saudi Arabia and non-OPEC producers led by Russia will meet on April 17 in the Qatar capital Doha, aiming for the first global supply deal in 15 years.

The front-month in US crude’s West Texas Intermediate (WTI) futures extended gains on Friday to as high as USD 40.55 a barrel, its highest in more than three months, and last stood at USD 40.35, up 0.4 percent.

Brent crude’s front-month reached the year’s peak of USD 41.60 and was last at USD 41.48. Copper also hit a four-month high of USD 5,075 a tonne while silver hit a 4-1/2-month high of USD 16.03 per ounce.