Asian shares traded mostly higher on Monday, as fears receded that the U.S. Federal Reserve would raise interest rates this week.
“Definitely they [the Fed] are not going to move in September,” said Kay Van-Petersen, global macro strategist at Saxo Bank in Singapore. He added that this view helped Asian markets pull back from a series of selloffs seen recently, when traders were worried the U.S. and Japan were on the brink of tightening monetary policies.
Korea’s Kospi index SEU, +0.82% gained 0.8%, with Australia’s S&P/ASX XJO, -0.04% closing about unchanged after a technical problem delayed the opening of financial markets there. A spokesman for ASX Ltd. ASX, -1.38% said there was an issue with a component that allows it to manage individual stocks. Japanese markets were shut for a holiday.
The Fed and the Bank of Japan will meet this week, and consensus is building that the central banks will unveil policies that are, at worst, neutral for markets.
“Investors are looking forward to the central banks’ action this week” to decide on investment strategies, said Andrew Chow, an associate director at UOB Kay Hian in Singapore.
Hong Kong’s Hang Seng Index HSI, +0.92% closed up 0.9%. Property stocks gained after an official survey on Monday showed that average housing prices in China rose 7.5% in August from a year earlier, accelerating from a 6.3% on-year increase in July.
Some company-specific news also lifted stocks. Sun Hung Kai Properties 0016, +1.91% , a leading Hong Kong developer, gained after it raised prices on a new residential development. Sun Hung Kai was up 1.8%. Sunac China Holdings Ltd. 1918, +7.12% rose 7.5% after it said it would buy 13.79 billion yuan ($2.07 billion) of property projects in China from Legend Holdings Corp. 0936, -4.58% . The property projects are located in 16 Chinese cities, including Beijing, Tianjin, Chongqing and Hangzhou.
The cost for banks in Hong Kong to borrow yuan from each other overnight jumped to 23.68% from 7.95% on Thursday. It was the highest level since January, when that short-term borrowing rate surged above 66%, making it nearly impossible for investors to bet against the offshore yuan.
Taiwan’s Taiex index Y9999, +2.81% added 2.8%, making it the best-performing major market in Asia, after stocks of companies that make components for Apple’s AAPL, +0.42% iPhone 7 rose on evidence of strong demand for the phone. Hon Hai Precision Industry 2317, +3.88% gained 3.9%, while Taiwan Semiconductor Manufacturing 2330, +5.19% climbed 5.2%. Lens maker Largan Precision 3008, +5.70% , which supplies the dual lenses in the new iPhone, jumped 5.7% on expectations of wider adoption of dual-lens technology in the industry.
The Shanghai Composite Index SHCOMP, +0.77% was up 0.8%. Data released last week showed that China’s factory output, retail sales and bank lending recovered in August, suggesting the economy was stabilizing. China also approved investment of up to 30 billion yuan of infrastructure projects Monday, while the central bank on Sunday injected net 140 billion yuan into the money market.
But analysts were skeptical of the sustainability of China’s stocks recovery.
“Given still fairly meager additional funds inflow [into China], the rebound is largely technical and upward space is limited,” said Jacky Zhang, an analyst at BOC International.
Oil prices rebounded in early Asia trade after a 2% decline over the weekend, with Brent LCOX6, +1.29% the international benchmark, up 1.6%. This was despite persistent oversupply keeping the market under pressure. Comments from Mohammed Barkindo, secretary-general of the Organization of the Petroleum Exporting Countries, also dampened sentiment. Barkindo said late Saturday that no decision on output cuts would be made at a Sept. 28 meeting in Algeria.