Asian shares off to cautious start after G20, US data

TOKYO - Asian stocks were off to a cautious start on Monday after a weekend meeting of the Group of 20 economic policymakers ended with no new coordinated action to spur global growth and as solid US data revived expectation of a US rate hike before year-end.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent, while Australian shares were up 0.4 per cent and South Korean shares were flat .

Japan's Nikkei gained 1.0 per cent largely on the overnight fall in the yen while US stock futures were little changed from late last week.

G20 finance ministers and central bankers agreed to use "all policy tools - monetary, fiscal and structural - individually and collectively" to reach the group's economic goals, citing a series of risks to world growth.

Some market players say the statement could mildly underpin market sentiment, but the lack of any concrete action plans provided for few catalysts.

"The G20 communique basically says 1) the world is not as bad a place as markets think; and 2) if it gets worse we will use fiscal, monetary and structural policy aggressively to fix it," Steven Englander, global head of G10 FX Strategy at CitiFX, said in a note to clients.

"In baseball parlance, they were aiming for a single in terms of restoring confidence and they probably achieved it," he added.

Fresh US economic data published on Friday revived expectations of Federal Reserve rate increases, helping to lift US bond yields and the dollar.

Consumer spending rose solidly in January and underlying inflation picked up by the most in four years. Gross domestic product growth in the fourth quarter was revised higher, to a 1.0 per cent annual rate

The figures prompted Federal funds rate futures to price in a more than 50 per cent chance of one rate hike by the end of year, compared to almost zero per cent chance in mid-February.

The two-year US Treasuries yield also hit a four-week high of 0.817 per cent on Friday and last stood at 0.801 per cent versus its Feb 11 low of 0.582 per cent.

The greenback's yield allure helped lift the dollar's index against a basket of six major currencies to a three-week high of 98.26 on Friday. It last stood at 98.13.

As the dollar gained, the euro fetched US$1.0920 (S$1.5385), having slipped to a three-week low of US$1.0912 on Friday. In early Asia on Monday, it traded at US$1.0931, flat on the day.

The yen also slipped to one-week low of 114 to the dollar on Friday but bounced back 0.2 per cent on Monday to 113.75.

Fears of "Brexit" offered traders a good excuse to sell the British pound, which fell to a seven-year low of US$1.3854 .

Although the British government managed to get G20 to agree to include a warning against "Brexit" in the statement, that appeared to have limited impact, with sterling trading slightly weaker at US$1.3861.

In the oil market, US crude futures were little moved at US$32.76 per barrel, holding on to their 11 per cent gains made last week, its steepest weekly rise since August.