Asian Shares Mixed On Lackluster US Lead

The Kiwi outperformed all major currencies, rising 0.8% against the US dollar after RBNZ Governor Graeme Wheeler signaled that rates might not drop much further from current levels as ongoing cuts in interest rates would further inflame an already overheated property market. However, weak USA growth and productivity data have made investors more skeptical of any hikes this year. Oil & gas producer Oil Search shed 0.8 percent on reporting an 89 percent fall in first-half profit.

Futures on the S&P 500 Index were little changed after the measure ended the last session within 0.4 percent of an all-time high.

Financial markets have been dominated over the past week by speculation about the timing of the Federal Reserve’s next increase in borrowing costs and an air of caution is evident before Chair Janet Yellen speaks Friday at an annual symposium in Jackson Hole, Wyoming.

In the USA, the dissonance of reports showing a surge in American new home sales and a slowdown in manufacturing brought into question the hawkish tone of recent comments from Fed officials, keeping the relative sense of calm across asset classes.

The big four banks rose between 1 percent and 1.5 percent while mining giant BHP Billiton gained 0.6 percent and smaller rival Fortescue Metals Group advanced 1.9 percent. The mixed economic data reflect a dimming outlook for the central bank to diverge from increased monetary stimulus in Europe and Asia. The yield curve between five-year notes and 30-year bonds flattened as low as 108.50 basis points on Tuesday, the flattest since March 2015, before ending the day at 109.10 basis points.

“Stan Fischer’s comments clearly raised the risk of a more hawkish tone from Yellen on Friday”, said Dennis Debusschere, a senior managing director and global portfolio strategist at Evercore ISI in NY. Regional Fed presidents including William Dudley and John Williams indicated last week that a rate hike could come as soon as next month, while futures prices indicate a 51 percent chance of such a move this year.

The prospect of higher rates tends to strengthen the dollar. Equities showed signs of breaking out of a recent torpor, with Monsanto leading a rally in raw materials as it’s said to be closer to a merger with Bayer AG. Chipmakers extended their recent gains to boost the technology group, and Best Buy Co. surged 19 per cent after surprising earnings.

USA treasury bond volatility was near a 20-month low. The benchmark S&P/NZX index rose 5.17 points or 0.07 percent to 7,467.33.

Oil climbed after Reuters reported that Iran is sending “positive signals” that it may support joint action to bolster the oil market, citing unidentified sources in OPEC and the oil industry.

West Texas Intermediate for October delivery was at US$47.34 a barrel on the New York Mercantile Exchange. Prices had dropped earlier Tuesday.

Gold slid 0.1 per cent to US$1,337.79, on course for its third-straight decline. New Zealand Refining slumped 7.8 percent and Comvita lost 6.6 percent after the two companies lowered their dividend payout ratios.