Asian shares near five-month high, dollar loses steam

By Hideyuki Sano

TOKYO (Reuters) – Asian shares prices held near five-month highs on Thursday after upbeat U.S. housing and Chinese factory data, while the dollar nursed modest losses following Federal Reserve Chair Janet Yellen’s comments.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> stood little changed near the five-month high hit on Wednesday while Japan’s Nikkei <.N225> rose 0.2 percent.

MSCI’s 46-country world index <.MIWD00000PUS> stood just below its double-top of its September peak and a record high hit in July.

“On the whole, the world’s markets seem likely to be in a risk-on mode. The valuation still looks not that expensive, except for U.S. markets,” said Hirokazu Kabeya, senior strategist at Daiwa Securities.

The price-earnings ratio of U.S. shares stood at 19.6, but the world’s markets on the whole were traded at 16.3 times the earnings, according to Thomson Reuters Starmine.

Wall Street shares were narrowly mixed on Wednesday as a positive mood was offset by a 2.6 percent fall in Apple <AAPL.O>, which saw some profit-taking after gaining 21 percent since the start of this year.

U.S. new homes sales data showed solid sales in January despite snow storms in the Northeast in the country. [USHNS=ECI].

The U.S. data followed a survey showing activity in China’s factory sector edged up to a four-month high in February.

Also whetting investors’ risk appetite, Yellen’s congressional testimony on Tuesday and Wednesday suggested the Fed is in no rush to raise rates, even though technically she did not rule a hike as early as in June.

“The only thing that is clear is that the FOMC (Federal Open Market Committee) has given itself more flexibility than before,” said Ray Attrill, Global Co-Head of FX Strategy at National Australia Bank in Sydney.

“If U.S. data begins to positive surprise once more, the market will quickly jump back on to the ‘Buy USD’ bandwagon.”

Following Yellen’s comments, U.S. bond yields have fallen sharply this week, with the 10-year notes yielding 1.972 percent <US10YT=RR>, compared to 2.133 percent at the end of last week and six-week high of 2.164 percent hit on Feb 18.

That took some shine off the dollar in the currency market particularly against the British pound and the Australian dollar.

The dollar index fell 0.3 percent on Wednesday to 94.208, turning negative on the week.

The euro stood at $ 1.1362 <EUR=>, maintaining its 0.2 percent gains the previous day.

Sterling hit an eight-week high of $ 1.5538 <GBP=D4> on Wednesday and last stood at $ 1.5527. Likewise the Australian dollar hit a four-week high of $ 0.7903 <AUD=D4> and last traded at $ 0.7885.

The prospects of U.S. interest rates staying near zero for some time were good news for gold, which recovered to $ 1,205.40 per ounce <XAU=> from seven-week low of $ 1,190.80 on Tuesday.

Oil prices jumped, with Brent crude surging five percent on Wednesday following comments from Saudi Arabia’s oil minister that oil demand was growing, and the upbeat Chinese factory data.

(Additional reporting by Ian Chua in Sydney; Editing by Eric Meijer)