Asian shares eased on Wednesday following modest losses on Wall Street, with investors awaiting U.S. jobs numbers for further clues to whether the Federal Reserve will raise rates as soon as September.
The growing possibility for an imminent rate hike lifted the dollar against major currencies such as the yen.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.35 percent as traders awaited August U.S. non-farm payrolls due on Friday after a run of strong economic data and hawkish comments from Fed officials. The index still remains on track for a 1.7 percent gain in August.
“The potential for the Fed to gradually lead international central banks out of the current stimulus phase is making investors wary about pushing stocks up to higher valuations,” Ric Spooner, chief market analyst at CMC Markets in Sydney, wrote in a note.
Japan’s Nikkei stock index .N225 ended the day 1 percent higher, up 1.9 percent for the month, boosted by a weaker yen after upbeat U.S. data lifted the dollar overnight. Sluggish domestic data that increased the prospect of further easing by the Bank of Japan also supported stocks.
Japanese industrial output was flat in July from June, data showed earlier on Wednesday, underscoring fragility in factory activity and falling short of economists’ median forecast for a 0.8 percent rise.
But on Tuesday, data showed July household spending fell less than expected and the jobless rate hit a two-decade low, offering some hope for policymakers.
BOJ board member Yukitoshi Funo said on Wednesday the central bank would make full use of its existing policy tools to move the country away from its “deflationary mindset.”
“While the latest string of Japanese data has been decent with the jobless rate improving and retail sales rising strongly in July, Japanese officials are clearly still frustrated with the weak growth in the economy,” said Kathy Lien, managing director of FX strategy at BK Asset Management.
Chinese shares rose, with the CSI 300 index .CSI300 gaining 0.4 percent and the Shanghai Composite .SSEC up 0.2 percent. They are on track for gains of 3.8 percent and 3.4 percent for the month, respectively.
Hong Kong’s Hang Seng index .HSI was up almost 0.1 percent, poised to end August 5.1 percent higher.
The dollar was steady at 103.05 yen JPY= after rising as high as 103.135 yen overnight, its strongest since July 29. It was up 0.9 percent for the month.
If the U.S. currency breaks 103.50 yen, its next stop would be 104, Lien wrote in a note.
The dollar index, which tracks the greenback against a basket of six major counterparts, was flat at 96.012 .DXY, remaining near its overnight top of 96.143, its highest since early August. It was on track to rise 0.5 percent for the month.
The euro inched up less than 0.1 percent to $1.11485 EUR=, down 0.2 percent for August.
On Wall Street on Tuesday, markets logged losses, dragged down by shares of Apple Inc (AAPL.O) after antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government.
The S&P 500 .SPX fell for the fourth time in five sessions, but was still within 1 percent of its record closing high set earlier this month.
The losses were capped by gains in financials, whose margins benefit from higher interest rates.
Friday’s U.S. jobs report is expected to show employers added 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters. [ECONUS]
Fed Vice Chairman Stanley Fischer said in an interview on Tuesday that the job market is nearly at full strength and the pace of interest rate increases will depend on how well the economy is doing.
As of Tuesday, markets were pricing in a 24 percent chance of a U.S. rate hike next month, according to CME Group’s FedWatch tool. That probability would rise if the jobless figures are stronger than expected, showing U.S. employers continued their strong pace of hiring seen in recent months.
U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labor market, data showed overnight.
Crude oil futures continued to slip after ending down for a second straight day on worries of oversupply and a strong dollar. [O/R]
Brent crude LCOc1 slipped 0.1 percent to $48.32 per barrel after shedding 1.8 percent on Tuesday, but remains on track for a 13.7 percent gain in August.
U.S. crude CLc1 was down 0.15 percent at $46.28 after losing 1.3 percent overnight. It is set to end the month 11.3 percent higher.
Spot gold XAU= edged up 0.2 percent to $1,313.26 an ounce after tumbling to as low as $1,308.65 on Tuesday, its lowest since late June, pressured by the stronger dollar and growing expectations of higher U.S. rates. It is headed for a 2.8 percent decline in August.
(Reporting by Nichola Saminather and Lisa Twaronite; Editing by Kim Coghill and Simon Cameron-Moore)