HONG KONG: Hong Kong stocks climbed more than two per cent on Wednesday (Feb 14), extending a rebound from last week's hammering but most other Asian markets were mixed as nervous investors await the release of key US inflation data fearing fresh volatility.
Tokyo fell to another four-month trough as the yen strengthened against the dollar, at one point hitting a 15-month high, while investors were unimpressed by data showing Japan's economy grew at a weaker-than-expected rate in the last quarter of 2017.
While Hong Kong and Seoul clocked up healthy rises following a positive lead from Wall Street, uncertainty continues across trading floors after last week's torment.
The Nikkei closed 0.4 per cent down as exporters were hit by the yen, which briefly hit 106.85 to the dollar, a level last seen since Donald Trump's election win in November 2016.
"Given the recent stock market slump, risk aversion has grown, which prompted safe-haven buying of the yen," Shinichiro Kadota, senior fx strategist at Barclays Securities, told AFP.
"The dollar's fall through the ¥108-mark and then ¥107-mark invited even more yen buying," he said, adding that investors were likely to "stick to yen buying unless their confidence recovers".
Hong Kong jumped 2.3 per cent, building on the 1.3 per cent rise Tuesday, though it had lost more than nine per cent over the previous week. Seoul gained more than one per cent.
Shanghai pared early losses to close 0.4 per cent up as dealers broke up for a week-long Chinese New Year break, Singapore fell 0.3 per cent, Sydney eased 0.3 per cent, Wellington dropped 0.8 per cent and Jakarta edged up 0.1 per cent
But the focus is on the release of US inflation, which could inflame or defuse anxiety about the Federal Reserve's timetable for lifting interest rates.
Rising US Treasury yields, consumer prices and wages, combined with a strong run-up in equities in recent months, have combined to spark this month's retreat - wiping trillions off global equities as the era of cheap borrowing comes to an end.
"It certainly feels like the proverbial calm before the storm and rightly so as there plenty of reasons to be cautious," said Stephen Innes, head of Asia-Pacific trading at OANDA.
However, he pointed out that US investors had pushed Wall Street higher for three straight days "despite the fresh memories of last week's market carnage in the wake of an inflationary uptick in wage growth".
On currency markets, the dollar edged up against the euro but was struggling to recover after falling almost one per cent against the unit on Tuesday. It pared losses against the pound but was down against most high-yielding currencies including the Australian dollar, South Korean won and Indonesian rupiah.
In early European trade London rose 0.7 per cent, Paris added 0.5 per cent and Frankfurt jumped 0.9 per cent.
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: DOWN 0.4 per cent at 21,154.17 (close)
Hong Kong - Hang Seng: UP 2.3 per cent at 30,515.60 (close)
Shanghai - Composite: UP 0.5 per cent at 3,199.16 (close)
London - FTSE 100: UP 0.7 per cent at 7,215.59
Euro/dollar: DOWN at US$1.2380 from US$1.2400 at 2130 GMT
Pound/dollar: UP at US$1.3900 from US$1.3890
Dollar/yen: DOWN at ¥107.23 from ¥107.83
Oil - West Texas Intermediate: DOWN three cents at US$59.16 per barrel
Oil - Brent North Sea: UP two eight at US$62.80
New York - DOW: UP 0.2 per cent at 24,640.45 (close)