Emerging Asian equities kicked off the month on a firm note on Wednesday, clawing back some losses from the prior session, with Malaysian shares hitting a nine-month high and Taipei stocks surging just shy of a peak as Wall Street notched modest gains.
Currencies, however, were more restrained. Regional units remained muted against the U.S. dollar as investors kept to the sidelines after the shutdown of the U.S. government.
The U.S. government partially shut down on Wednesday after bitter partisan divisions blocked Congress and the White House from striking a funding deal.
The Indonesian rupiah and Thai baht fell 0.2% each while the Philippine peso and Taiwan dollar were trading unchanged.
The U.S. dollar index, which measures itself against a basket of currencies, hovered near a one-week low versus major peers ahead of the shutdown.
Markets remain wary that a prolonged shutdown could delay the release of key jobs data, leaving the Federal Reserve without critical visibility ahead of its October 29 policy meeting.
Trading in currency markets remained subdued on Wednesday with investors lacking any major cues as China’s markets remain shut for the week-long holiday from Wednesday.
“Asian currencies are trading subdued today in the absence of fresh catalyst while China’s onshore markets are out for Golden Week holidays, in turn providing little cues,” said Christopher Wong, a currency strategist with OCBC.
“There is also a ‘wait-and-see’ stance in light of the risk of U.S. government shutdown, as it raises concerns of economic slowdown if the shutdown persists for longer.”
Across equities, Taiwan’s benchmark jumped as much as 2% to trade just shy of a record high, while MSCI’s index of EM Asia shares rose 0.7%, heading for a third straight gain.
A similar ASEAN gauge added 0.3%. Three major indexes on Wall Street closed higher in a choppy session overnight, a move that aided the benchmark in Taipei.
Stocks in Kuala Lumpur added as much as 0.7% to hit their highest since early January.
Equities in Singapore gained 0.8% and touched their highest since September 17 and were on track for their third straight session of gains.
Maybank analysts noted that Malaysian equities gained despite both mid-cap and small-cap indexes declining.
“This suggests the market focus is shifting back to big-cap counters while the broader market undergoes a healthy consolidation phase,” they added.
Shares in Manila which dragged 3.3% in September, were trading 0.8% in the green after having fallen for seven straight days.
Stocks in Bangkok gained 0.1% while the benchmark indexes in South Korea and Indonesia added 0.8% and 0.1%, respectively.
HIGHLIGHTS:
** Indonesian 10-year benchmark flat at 6.342%
** Death toll rises to 27 after powerful quake hits central Philippines
** New Thai central bank chief says he will work with government but maintain independence – Reuters