By Kenan Machado
Asian shares were broadly down Wednesday except in Japan, where a weaker yen against the dollar pushed stocks higher.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +1.15% rose 1%, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.54% fell 0.8%, and Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.11% was down 0.3%.
“Overall, the market is more cautious than bearish,” said Castor Pang, head of research at broker Core Pacific-Yamaichi International.
Earlier, the dollar gained on expectations that the U.S. Federal Reserve was inching closer to raising interest rates. The greenback /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0424% rose 1.1% against the Japanese yen in U.S. trade, while the WSJ Dollar Index /zigman2/quotes/210673925/realtime XX:BUXX +0.16% , which measures the U.S. currency against 16 others, hit a one-month high.
This lifted shares of Japanese exporters, which benefit from a weaker yen. Toyota Motor Corp. /zigman2/quotes/200537742/composite TM -0.10% /zigman2/quotes/203803129/delayed JP:7203 +2.27% rose 0.8%, and Nissan Motor Co. /zigman2/quotes/208298710/delayed JP:7201 +1.86% added 1.2%. Camera maker Canon Inc. /zigman2/quotes/207639533/delayed JP:7751 +1.29% gained about 2%.
The gains in Japanese equities came even as the latest data showed that the nation’s industrial output remained unchanged in July — missing the 0.8% increase economists expected — following a 2.3% rise in June.
The prospect of higher U.S. interest rates has sent stocks elsewhere in the region into retreat by raising fears of capital outflows, but analysts call the worries overdone. Strong growth and high yields will keep capital in the region’s emerging markets, they say.
Will Leung, head of investment strategy at Standard Chartered Wealth Management, said he expects U.S. payrolls data, due Friday, to drive market speculation over rate increases. The data, he said, will likely determine whether the Fed raises rates as early as September.
But some analysts argue that the Fed may hold off until wage inflation picks up in the U.S., as strong payrolls data hasn’t resulted in higher pay.
“With the evidence we have right now, September would be too soon,” said Daniel Morris, a senior investment strategist at BNP Paribas Investment Partners.
Investors also remain uncertain as to whether central banks globally will continue the monetary easing that has boosted equity markets, said Morris. “You honestly don’t have a lot of buyers and if you own equities you don’t want to sell.”
Elsewhere in Asia Wednesday, the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +1.15% reversed earlier losses to close up 0.4%, while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.81% slid 0.2%.
Chinese lenders got a boost from their first-half earnings reports. Among them, Hong Kong-traded shares of Bank of China gained 1.2% after the bank reported late Tuesday that first-half net profit was up 2.5% from a year earlier, lifted by strong growth in fee income.
In Korea, shares of shipping firm Hyundai Merchant Marine Co. /zigman2/quotes/204437954/delayed KR:011200 +2.19% surged 26% after the government prodded the company to buy the healthy assets of troubled Hanjin Shipping Co. Hanjin filed for receivership Wednesday.
In Singapore, shares of Singapore Airlines Ltd. /zigman2/quotes/208369943/delayed SG:C6L +0.33% headed lower for the fourth straight session, and were last down 0.2%, on the spread of the Zika virus in the city state.