Asia shares gain despite Wall St. weakness, dollar edges higher

Asian Stock Markets

Asian shares shrugged off Wall Street losses and a lackluster start to rally on Thursday, while the dollar edged up as investors priced in more U.S. rate hikes after upbeat economic data.

Futures portended solid openings for European bourses, with European stock futures STXEc1 up 0.3 percent, Dax futures FDXc1 up 0.4 percent, and FTSE futures FFIc1 and CAC futures FCEc1 each up 0.3 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.7 percent.

Australian stocks added 0.2 percent, with sentiment helped by data showing the country’s jobless rate dipped to 5.4 percent in October, its lowest since early 2013.

Japan's Nikkei .N225 reversed early losses and surged 1.5 percent as investors hunted for bargains after a six-day losing streak [.T]

EMini futures for the S&P 500 ESc1 added 0.3 percent after major indexes dropped on Wall Street overnight, with the S&P 500 energy sector .SPNY suffering a four-day decline of 4 percent, its weakest such period in 14 months. [.N]

Investor concern over the progress of a massive U.S. tax reform plan showed no sign of abating as two Republican lawmakers on Wednesday criticized the Senate’s latest proposal.

The dollar index .DXY, which tracks the greenback against a basket of six major rivals, was slightly higher on the day at 93.828. The euro was steady at $1.1791 EUR=, retreating from a one-month top of $1.1860 on Wednesday.

Against its Japanese counterpart, the dollar gained 0.2 percent to 113.04 yen JPY= after it sunk as deep as 112.47 overnight. But it remained well shy of its eight-month high of 114.735 hit last week as Japanese stocks pushed to multi-decade highs.

Doubts that the latest round of talks to overhaul the North American Free Trade Agreement would make much headway in the face of tough U.S. demands saw Mexico's peso MXN= sink to an eight-month low on Wednesday, though it steadied in Asian trade.

Mostly upbeat economic news added to expectations that the Federal Reserve would not only hike in December, which is now almost fully priced in, but multiple times next year as well.

Core U.S. inflation edged higher and retail sales beat forecasts in a positive sign for growth.

The rate outlook could push the two-year Treasury yields US2YT=RR up further from its nine-year peaks, after the yield curve hit its flattest in a decade.

Investors also suspect this tightening will slow the U.S. economy and stop inflation ever getting to the Fed’s 2 percent target, pulling down longer-term yields US10YT=RR. As a result the gap between two- and 10-year yield has shrunk to its thinnest premium since late 2007.

In commodity markets, gold XAU= edged down 0.1 percent to $1,277.29 an ounce. It reached $1,289.09 overnight, its highest since Oct. 20.

Oil prices gained despite pressure after the U.S. government reported an unexpected increase in crude and gasoline stockpiles. They had lost ground to this week’s International Energy Agency (IEA) outlook for slower growth in global crude demand. [O/R]

U.S. crude CLc1 added 5 cents to $55.38 a barrel. Brent crude futures LCOc1 were 15 cents higher at $62.02.