Dollar Falls Before Fed Minutes as Hong Kong Shares Surge

The dollar weakened and European bonds rose before the Federal Reserve releases minutes of its March meeting, while crude oil fell ahead of U.S. inventory data. Surging Hong Kong shares pushed Asian stocks to the highest since 2008.

The Bloomberg Dollar Spot Index slipped 0.4 percent by 8:17 a.m. in London, with the euro climbing 0.5 percent. The yield on German and French 10-year notes fell two basis points and the Stoxx Europe 600 Index was little changed. The MSCI Asia Pacific Index rose 1.3 percent as the Hang Seng Index jumped the most since December 2011. Standard & Poor’s 500 Index futures fluctuated. Oil in New York retreated for the first time in three days.

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Minutes of the Fed’s March meeting may offer insight on the timing of U.S. rate rises after the Bank of Japan maintained its record stimulus Wednesday. German factory orders unexpectedly fell, while analysts project an increase in record U.S. crude stockpiles. Hong Kong shares surged after China’s Shanghai Composite Index more than doubled in 14 months amid indications of government support for the equity market.

“The rally in Asian equities should continue since Japan and China” are keeping their monetary policies accommodative, Nicholas Teo, a Singapore-based strategist at CMC Markets, said by phone. “The H-shares in Hong Kong are catching up with valuations of mainland equities. The valuation gap should narrow as China undertakes financial liberalization.”

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October Bets

The Bloomberg dollar gauge, which tracks the U.S. currency against 10 major peers, climbed 0.9 percent the past two days. The euro added 0.3 percent to $ 1.0841 following a 1 percent decline Tuesday. The Australian and New Zealand dollars advanced at least 0.5 percent.

The yen was 0.3 percent stronger at 119.91 after losing as much as 0.8 percent to 120.45 per dollar Tuesday, its weakest intraday level since March 20. Japan’s Topix index advanced a second day and closed at the highest since March 25.

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The BOJ kept to its plan to expand the monetary base at an annual pace of 80 trillion yen ($ 667 billion), as forecast by all 34 economists in a Bloomberg News survey. The BOJ is among a wave of central banks easing policy to stave off deflation and ignite growth. By contrast, the Fed has ended its bond-buying program and is pondering its first rate increase since 2006.

The Asia-Pacific stock gauge is heading for its highest close since June 2008. All 10 industry groups have advanced this year, with the recent surge in oil helping a subindex of energy shares to reverse a first-quarter slump.

China Rally

The Hang Seng Index jumped 3.2 percent amid volume almost three times the 30-day average for the time of day. The city’s benchmark gauge is trading at its highest level since May 2008.

A gauge of Chinese companies listed in the city, so-called H shares, surged toward its biggest five-day gain since 2011. Buying of Hong Kong shares by mainland investors via a link with the Shanghai bourse increased to a record.

The Shanghai Composite Index rose to a level that was more than double its 2014 low, and surpassed 4,000 points for the first time since 2008. China needs strong support from the stock market as its economy faces relatively large pressure this year, the official Xinhua News Agency said in an article Tuesday.

Mobius Caution

“It has gone a little too far and too fast,” Mark Mobius, who oversees about $ 40 billion as the executive chairman of Templeton Emerging Markets Group, told reporters in Hong Kong. A 20 percent retreat is “very possible,” he said, noting record numbers of new stock-account openings and all-time high levels of margin debt. “Too much credit is not a good thing in the long run. When the market turns, it could be a problem.”

The Stoxx 600 is close to a record, having advanced 18 percent this year. BG Group Plc surged 37 percent after Royal Dutch Shell Plc agreed to buy the company for about 47 billion pounds ($ 70 billion) in cash and shares, the oil and gas industry’s biggest deal in at least a decade.

West Texas Intermediate crude slipped 1.9 percent to $ 52.97 a barrel after surging almost 10 percent the past two days and settling at a 2015 high on Tuesday. Brent decreased 1.2 percent to $ 58.37 in London.

U.S. crude inventories probably rose by 3.25 million barrels through April 3 for a 13th week of gains, according to a Bloomberg survey before an Energy Information Administration report due Wednesday. Supplies increased by 12.2 million barrels, industry data showed Tuesday, according to a person familiar with the figures who asked not to be identified.

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