GLOBAL MARKETS-Asian shares at 15-month high, dollar soft on less hawkish Fed


Reuters

* U.S. bond yields ease, taking dollar with them
    * Chicago Fed Evans says two more rate hikes likely this
year
    * Asia shares hit 15-month high
    * Oil prices tick up on hopes of extended OPEC-led output
curb

    By Hideyuki SanoTOKYO, March 21 (Reuters) - Asian shares hit 15-month highs
on Tuesday while the dollar and U.S. bond yields were on the
back foot on the prospect of a less-hawkish Federal Reserve
policy trajectory.
    MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> rose 0.4 percent to 15-month highs, with
tech-heavy Seoul and Taipei shares <.KS11> <.TWII> hitting
two-year highs while Hong Kong's Hang Seng <.HSI> scaled 1
1/2-year highs.
    Japan's Nikkei <.N225> dropped 0.3 percent, weighed by
financial stocks, which were hurt by lower U.S. yields and
exporter stocks, which fell on the yen's gains against the
dollar.
    While Asian shares have been supported by signs of strong
global economic growth, concerns about protectionism cast a
shadow after financial leaders of the world's biggest economies
dropped a pledge to keep global trade free and open, acquiescing
to an increasingly protectionist United States. [nL2N1GX1EJ]
    Wall Street shares drifted lower on Monday as investors
worried that President Donald Trump's plan to cut taxes and
boost the economy could take longer than earlier expected.
    "Any fiscal spending by the Trump administration will not
come until August at earliest and probably much later. So any
economic benefit of that will show up only next year," said a
senior trader at a European bank.
    "So the markets are gradually pricing that in, winding back
their initial rally after the elections."
    Although Trump promised in early February to deliver a
"phenomenal" tax plan within a few weeks, no such details have
been released yet.
    "U.S. stocks valuations are getting really expensive, so I
expect the market to be capped for now. That also means Japanese
shares are unlikely to gain further," said Tatsushi Maeno,
senior strategist at Okasan Asset Management.
    Expectations that the Federal Reserve will have to step up
rate hikes to counter inflationary pressure from Trump's
stimulus are also waning after the Fed dropped no hints of an
acceleration in credit tightening last week.
    Chicago Federal Reserve President Charles Evans, in one of
the first official comments after the Fed raised rates as
expected last week, reiterated that message on Monday.
[nN9N1GG007]
    He said that two more interest rate hikes this year were
likely, disappointing investors who had anticipated rates to be
increased more quickly.
   Evans's comments helped to bring down the 10-year U.S.
Treasuries yield <US10YT=RR> to 2.461 percent, its lowest level
in two weeks. It last stood at 2.479 percent.
    Lower yields undermined the greenback's allure, softening
the dollar to three-week lows near 112.26 yen <JPY=> in early
Asian trade.
    The euro <EUR=> ticked up to $1.0758, near Friday's six-week
high of $1.07825, maintaining its gains made last week after a
election defeat for Dutch far-right leader Geert Wilders, which
eased broader fears of a populist drift in European politics.
    In France, centrist Emmanuel Macron solidified his status as
front-runner in the presidential election in a televised debate
on Monday. [nL5N1GX44S]
    "At the moment, worries about the election have subsided a
bit after the Dutch elections. But I expect the market to become
more nervous near the election, given last year's experiences
(with Brexit and the U.S. elections)," said Kazushige Kaida,
head of foreign exchange at State Street.
    The dollar's index against a basket of six major currencies
<.DXY> <=USD> stood at 100.26, after hitting a six-week low of
100.02 on Monday.
    The spectre of slower U.S. rate hikes has been helping
high-yielding currencies.
    The Australian dollar <AUD=D4> traded at $0.7706, after
hitting a 4-1/2-month high of $0.7748 on Monday. It has risen
2.0 percent since the Fed's policy meeting last week.
    The South African rand <ZAR=D4> has gained 4.0 percent since
then to a near 1-1/2-year high while the Brazilian real rose 3.2
percent <BRL=>.
    Oil prices rose in Asia on expectations that an OPEC-led
production cut to prop up the market could be extended.
    Prices for front-month Brent crude futures <LCOc1>, the
international benchmark for oil, gained 0.4 percent to $51.83
per barrel.
    OPEC members increasingly favour extending the output curb
beyond June to balance the market, sources within the group
said, although they added that this would require non-OPEC
members such as Russia to also step up their efforts.
[nL5N1GU2QU]

 (Reporting by Hideyuki Sano; Editing by Sam Holmes and Eric
Meijer)
 ((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827; Reuters
Messaging: hideyuki.sano.thomsonreuters.com@reuters.net))

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((For the state of play of Asian stock markets please click on: <0#.INDEXA>))

Keywords: GLOBAL MARKETS/ (WRAPUP 2)



This article appears in: World Markets , World Markets , US Markets , US Markets , Stocks , Stocks


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