Dollar extends gains, Seoul hits record but most Asia stocks fall

The dollar built on the previous day’s gains on Thursday after the Federal Reserve opened the door for another US interest rate hike next month, while Seoul outperformed most other Asian markets to end at a record high.

After a closely watched meeting the US central bank gave a broadly positive view of the world’s top economy and said a recent spout of soft data, including below-par first-quarter growth, were “likely to be transitory” and that activity would pick-up over the year.

The Fed’s statement fanned expectations it will announce another rate lift next month — the second since December — as long as data points in the right direction.

Focus now turns to the release Friday of the government’s jobs creation data for April and statements from Fed boss Janet Yellen as well as other top bank officials, which could provide some forward guidance to markets.

“The Fed has doubled down on its confidence that the US economy is still on track for more rate rises and growth will bounce back from the first quarter’s moribund pace,” Greg McKenna, chief market strategist at AxiTrader, said in a note.

The dollar headed towards the 113 yen mark Thursday, building on a recent rally, while it held up against the euro and pound. It also advanced against most high-yielding currencies including the Australian dollar, Indonesia’s rupiah and the Thai baht.

The pound saw a brief dip in Asian trade as rumours circulated — later reported as untrue — that Queen Elizabeth II or husband Prince Philip had died, which fuelled worries of further political instability in Britain.

“The Federal Reserve remains on track to deliver two more interest rate hikes this year as it focuses on the steady decline in the unemployment rate, rather than fluctuations in (economic) growth,” said Richard Jerram, chief economist at Bank of Singapore.

– Seoul hits record –
Despite the positive spin from the Fed, Asian equities mostly struggled Thursday in a week that has seen several markets closed for various public holidays.

Hong Kong slipped 0.1 percent, Shanghai ended down 0.3 percent and Singapore shed 0.4 percent.

Wellington and Taipei were down 0.4 percent each.

Sydney sank 0.3 percent on a drop in iron and copper prices. BHP Billiton ended flat, reversing early losses that came after Australia blocked a plan by one of the mining giant’s top shareholders to move its primary listing to London.

New York-based Elliott Advisors wants to restructure the firm — saying it could unlock as much as 50 percent more value in the stock — and dissolve its costly dual-listed structure, with assets transferred to a new company incorporated and listed in Britain.

Canberra said such a move was against the country’s interests and without government consent it could amount to a criminal offence.

Seoul’s KOSPI ended one percent up at a record high thanks to a pick-up in foreigners entering the South Korean market and improving corporate results.

The KOSPI has been on a consistent upward trend since December, driven by rising expectations and profits.

The share price of market bell-wether Samsung Electronics — which reached a new record high Thursday — has been a key factor, with the firm making up 25 percent of the index.

“South Korean companies’ first-quarter operating profits were up 50 percent from a year earlier,” said Lee Jong-Woo at IBK Investment & Securities.

In early European trade London rose 0.4 percent, Paris put on 0.1 percent and Frankfurt gained 0.2 percent.

– Key figures around 0820 GMT –
Hong Kong – Hang Seng: DOWN 0.1 percent at 24,683.88 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,127.37 (close)

Tokyo – Nikkei 225: Closed for holiday

London – FTSE 100: UP 0.4 percent at 7,264.20

Euro/dollar: DOWN at $1.0880 from $1.0887 at 2100 GMT

Pound/dollar: DOWN at $1.2866 from $1.2873

Dollar/yen: UP at 112.75 yen from 112.67 yen

Oil – West Texas Intermediate: DOWN 27 cents at $47.55 per barrel

Oil – Brent North Sea: DOWN 27 cents at $50.52

New York – Dow: FLAT at 20,957.90 (close)