Asia markets mostly mixed in early trade, Singapore shares up 0.6%

Asia markets mostly mixed in early trade, Singapore shares up 0.6%

Asian markets traded mixed on Thursday, ahead of a Bank of Japan monetary policy decision, and after most major US indexes held onto gains overnight following the US Federal Reserve's decision to stand pat on rates.

In Singapore, the Straits Times Index opened 0.6 per cent higher, gaining 17.13 points to 2,891.85, The Business Times reported.

Australia's ASX 200 was up 0.44 per cent in early trade, boosted by advances in the energy, materials and financials sub-indexes.

In Japan, the Nikkei 225 advanced 1.03 per cent, while across the Korean Strait, the Kospi wavered between positive and negative territory before trading down 0.19 per cent.

The US Federal Reserve opted not to raise interest rates on Wednesday local time, citing a slowdown in economic activity stateside. The Federal Open Market Committee's (FOMC) statement highlighted the many conflicting signs in the economy that included consistent job growth and an improving housing market but slowdowns in business investment and exports.

"The Fed statement was incrementally more hawkish than its March statement, removing its concerns about "global and financial developments"," said Angus Nicholson, a market analyst at IG.

The removal of uncertainty following the end of the Fed meeting is "likely to be taken as a positive for Asian markets today," he said.

Overnight, the Dow Jones industrial average closed up 0.28 per cent and the S&P 500 added 0.16 per cent, while the Nasdaq composite closed down 0.51 per cent.

In the currency market, the dollar was flat against a basket of currencies; the dollar index traded at 94.403, compared to its previous close at 94.387.

Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said the Fed's statement was a positive for the greenback. "Global troubles no longer worry the Fed, putting them one step closer to raising interest rates," she said.

The Japanese yen retreated 0.11 per cent against the dollar as of 8:22 a.m., trading at 111.57. Last week, the dollar/yen pair fell as low as 109.24 at one point and earlier this week went as high as 111.88.

"Over the past few trading days, we have seen a very nice breakout in dollar/yen," said Lien, adding the move was driven by reports that the BOJ could "introduce negative lending rates to complement negative deposit rates." She said traders were aggressively short on the dollar/yen and that it "won't take much to squeeze the currency pair higher."

Major Japanese exporters saw their shares climb Thursday morning, with Toyota up 1.61 per cent, Nissan higher by 1.05 per cent and Sony adding 0.97 per cent. A relatively weaker yen is a positive for exporters as it increases their overseas profits when converted to local currency.

Elsewhere, the Australian dollar was up 0.2 per cent at US$0.7598, after dropping close to 1.8 per cent at one point in the Wednesday session following fresh probability of monetary easing from the Reserve Bank of Australia (RBA) after inflation unexpectedly fell.

Ray Attrill, global co-head of foreign exchange strategy at the National Australia Bank, said following the drop in consumer price index on Wednesday, the bank now expects "a 25 basis points reduction in the Cash Rate (to 1.75 per cent)" when the RBA meets next week.

Early morning Thursday, the Reserve Bank of New Zealand (RBNZ) left its official cash rate unchanged at 2.25 per cent.

In its monetary policy statement, the central bank said the global growth outlook had deteriorated due to weakness in China and other emerging markets. The bank expects local inflation to strengthen as "effects of low oil prices drop out and as capacity pressures gradually build."

The benchmark NZX 50 was up 0.22 per cent, while the New Zealand dollar climbed 1.26 per cent to US$0.6916 after the RBNZ decision.

Investors will look to the Bank of Japan, which is set to announce its monetary policy decision later on Thursday, with many analysts expecting further stimulus.

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