Asian equities tracked a mild bounce on Wall Street to edge higher on Wednesday, although caution over talks later in the day in the ongoing Greek debt saga limited the gains.
Japan’s Nikkei rose 0.9 per cent, given an extra lift by a weaker yen and Australian shares gained 0.4 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan was steady.
US shares gained modestly overnight, with the S&P 500 touching another record high, after hopes that Greece will make on an agreement on emergency loans sharpened the risk appetite that was dulled by Monday’s collapse in negotiations.
Risk appetite, tinged by optimism on Greece, hurt US Treasuries and sent the benchmark 10-year note’s yield to a seven-week high, which in turn boosted the dollar versus the yen.
Dollar vs other currencies
The dollar was steady at 119.21 yen after jumping from a low of 118.235 overnight. The euro was little changed at $1.1402 after gaining 0.4 per cent the previous day on Greek optimism.
Greece will remain an immediate concern for the financial markets as the European Central Bank decides later in the day whether to maintain emergency lending to Greek banks which have lost deposits at an unnerving rate.
While the ECB is unlikely to lower the ceiling on the emergency lending assistance (ELA) by the Greek central bank, a refusal to increase it would nonetheless be bad news for Greek banks which are close to using up all the €65 billion granted so far.
Bank of Japan policy meet
Central banks were also expected to take a share of the headlines in Asia, with the Bank of Japan due to end its policy-setting meeting on Wednesday.
The BoJ is set to maintain its massive asset buying stimulus spree on Wednesday and revise up its view on output, even as data showing only a feeble recovery from recession tempers its optimism.
Key US data
Other focal points with potential impact across markets are US data due later in the session, including manufacturing and housing-related indicators and minutes of January’s Federal Reserve monetary policy meeting.
“Bottom line is most of the committee will embrace a data dependent approach that leaves a June start to a hiking cycle firmly entrenched,’’ Richard Cochinos, a strategist at CitiFX, wrote in a note to clients.
“In addition, the minutes should help illuminate exactly what ‘international considerations’ means,’’ Cochinos said, pointing to the Fed’s recent reference to global developments with a potential impact on the US economy.
US crude oil was down 35 cents at $53.18 a barrel after gaining 75 cents overnight as threats to West Asian production and a falling US rig count seemed to spur market bulls.