HONG KONG: Tokyo's Nikkei rallied on Tuesday (Jun 20) as the dollar extended gains against the yen on fresh indications the Federal Reserve will lift interest rates again this year, while technology firms tracked a sector rebound on Wall Street.
However, most other regional markets struggled after Monday's healthy gains, despite being given a positive lead from Wall Street where the Dow and S&P 500 closed at fresh record highs.
One of the key drivers of Monday's US rally were comments from influential New York Federal Reserve Bank president William Dudley, who reaffirmed the bank's plan to press on with its rate hikes and forecast of higher inflation.
He said that despite tepid price rises, he was confident that "if the labour market continues to tighten, wages will gradually pick up".
"Hitting the right chords and sounding dismissive about the recent slowdown in inflation, an unrepentantly hawkish Dudley provided the USD bulls with enough fodder," Stephen Innes, senior trader at OANDA, said in a note.
The remarks came after Fed boss Janet Yellen sounded a more hawkish tone than usual, while the central bank set out plans to wind down its asset holdings to suck cash out of the financial system.
The greenback jumped in US trade and kicked on in Asia, heading towards ¥112 for the first time since the end of May.
TAKATA HAMMERED AGAIN
Tokyo stocks ended 0.8 per cent higher, with exporters key winners thanks to the weaker yen, while tech firms bounced after two weeks of sharp losses.
However, airbag maker Takata plummeted 20 per cent, meaning it has lost a third of its value in just two days following reports it will file for bankruptcy protection and sell its assets to a US company.
Japan's Nikkei business daily said last week the company, with liabilities exceeding $9 billion, would make a formal decision about the filing at a board meeting this month.
Other major markets struggled, though. Hong Kong lost 0.3 per cent, Sydney fell 0.8 per cent and Seoul gave up 0.1 per cent. Singapore was marginally lower while Wellington and Manila were also down.
Shanghai slipped 0.8 per cent as investors await a decision by MSCI on whether to include it in its list of emerging market benchmark indexes.
The bourse has been denied for the previous three years over concerns about certain restrictions, despite Beijing providing greater access to its domestic, yuan-based capital markets.
MSCI said China still maintains problematic restrictions including a 20 per cent monthly repatriation limit, which it called "a significant hurdle for investors," and too many restrictions on new financial product offerings.
In early European trade London rose 0.1 per cent, Paris added 0.4 per cent and Frankfurt put on 0.3 per cent.
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: UP 0.8 per cent at 20,230.41 (close)
Hong Kong - Hang Seng: DOWN 0.3 per cent at 25,843.04 (close)
Shanghai - Composite: DOWN 0.8 per cent at 5,757.30 (close)
London - FTSE 100: UP 0.1 per cent at 7,528.80
Dollar/yen: UP at ¥111.62 from ¥111.54 at 2100 GMT
Euro/dollar: UP at US$1.1158 from US$1.1149
Pound/dollar: UP at US$1.2745 from US$1.2734
Oil - West Texas Intermediate: DOWN three cents at US$44.17 per barrel
Oil - Brent North Sea: DOWN one cent at US$46.90
New York - Dow: UP 0.7 per cent at 21,528.99 (close)