Asian Shares Rise as Crimea Tensions Ease, Fed in Focus
March 18, 2014 3:42 PM EST
Asian shares rose on Tuesday and the yen remained well off recent highs as the threat of immediate military conflict in Ukraine receded, though investors remained cautious ahead of this week's U.S. Federal Reserve policy meeting.
An employee of the Tokyo Stock Exchange (TSE) looks at a monitor at the bourse at the TSE in Tokyo on 3 March, 2014.
MSCI's broadest index of Asia-Pacific shares outside Japan added about 0.3 percent.
On Wall Street on Monday, U.S. stocks turned in a solid performance, with the S&P 500 adding about 1 percent.
"In immediate focus is Russian president Vladimir Putin's speech later today. If he plays down an immediate annexation of Crimea by Russia, the dollar could gain further ground on unwinding of risk aversion," said Masafumi Yamamoto, chief strategist at Praevidentia Strategy in Tokyo.
"But an expression of desire for a swift annexation and retaliation against sanctions placed by the European Union and the United States will rekindle economic fears, driving U.S. government bond yields lower and weighing on the dollar," he said.
Japan's Nikkei stock average rose 1.1 percent, recovering from a six-week closing low hit on Monday.
Short-covering was likely behind some of Tokyo's gains, as the ratio of short-selling to overall sales in the Tokyo Stock Exchange hit a record high of 36.17 percent the previous day.
"Some of those who sold yesterday are probably buying back today," said Hideyuki Ishiguro, senior strategist at Okasan Securities.
For the time being, risk appetite improved as the likelihood of immediate military conflict faded, and market participants turned their attention back to the U.S. economic outlook and the conclusion of the Fed's two-day meeting on Wednesday.
The Fed is expected to continue to stick to reducing its monthly asset purchases by an additional $10 billion, and could also alter its forward guidance in its statement.
Fed policymakers could adopt less specific language to describe conditions under which it might tighten policy, instead of the bank's current threshold of a 6.5 percent unemployment rate for considering a rate rise. The rate now stands at 6.7 percent, though Fed officials are still signalling that rates need to stay low for some time to support the economy.
The dollar was slightly higher on the day at 101.78 yen, while the euro added about 0.1 percent to 141.80 yen.
The euro edged up about 0.1 percent to $1.3932, within sight of a 2-1/2-year high around $1.3967 touched on Thursday.
The single currency's resilience was despite data on Monday showing a dip in euro zone inflation, the latest indicator to back the view that the European Central Bank needs to take further monetary steps to support growth.
The improvement in risk sentiment took a toll on gold, which hit a six-month high on Monday before plunging more than 1 percent. It was last down about 0.4 percent at $1,360.21 per ounce, well shy of the previous session's peak of $1,391.76.
U.S. crude edged down 0.1 percent to $97.97 a barrel, falling for the second day in a row, as expectations of growing petroleum stockpiles in the world's biggest oil user offset any fears that Ukraine tensions could worsen.
Join the Conversation
- Travel Alert: New Delta Air Lines Airbuses Could Be Seen In Australia Soon
- Walmart Canada Feeling The Heat As Grocery War Intensifies
- Travel Alert: Frequent Flyer Tie-Up Between Virgin Australia, South African Airways Enhanced
- Product Recall: Graco Recalls Baby Strollers in Canada, U.S. Due To Amputation Risks
- Travel Alert: Malaysia’s AirAsia Cuts Number Of Australian Flights
- Black Friday 2014 Sale: Top Deals On Game Consoles Xbox One, PS4, Nintendo Wii U And More
- Walmart Pre-Black Friday 2014 Sale On Nov. 21, 2014 Includes Discounts On The 'NBA 2K15' For PS4 And The 'Skylanders Trap Team’ Starter Kit [WATCH VIDEO]
- More Bad News for Android 5.0 Lollipop As Problems Come In for Nexus and Other Devices
- BlackBerry Classic (aka Q20) Keyboard Shortcuts Explained In A Quick Video
- US To Supply Defensive Lethal Weapons To Kiev – A Vey Alarming Signal, Says Russia
- Amazon Black Friday 2014 Deals Start On Nov. 21, 2014 Including Limited-Time Lightning Deals And Deals Of The Day On Clothes, Toys, Jewelry, Watches, Bags, Accessories And Electronics
- Samsung Galaxy Note Edge Battery Life Test Shows Its Curved Display And Build Has Impacted Its Battery Performance