HONG KONG (NewsRise) - Asian stocks rose marginally on Thursday, tracking overnight gains in Wall Street amid optimism over President Donald Trump's economic policies. The increased prospects of a rate hike by the Federal Reserve, however, capped the advance.
The Nikkei Asia300 Index rose 0.1% to 1,131.51. U.S. stocks posted their best session this year as investors cheered Trump's reconciliatory tone and measured approach in his address to the Congress, in which he once again alluded to tax cuts for companies. The Dow Jones Industrial Average has risen over 15% since November on hopes the President will adopt pro-growth fiscal policies and loosen financial regulations.
The buoyant cues from Wall Street were, however, tempered by a jump in U.S. borrowing costs, which raised fears of foreign fund outflows from the region. The sharp rise in U.S. bond yields -- two-year Treasury yields on Wednesday closed at the highest level since 2009 -- comes after Fed official Lael Brainard said a rate hike may be 'appropriate soon' given an improving global economy and a solid U.S. recovery. More policymakers, including Fed Vice Chair William Dudley, had earlier this week made a case for monetary tightening.
The probability of a Fed March rate increase jumped to 66% chance, according to CME Group's FedWatch tool.
The Nikkei Asia300 Hong Kong index slipped 0.1% to 1,082.36, led by decline in rate sensitive developers. Sun Hung Kai Properties fell 1.1% and Cheung Kong Property Holdings declined 1.6%. Hong Kong interest rates move in line with the U.S. as the city's currency is pegged to the dollar.
The Nikkei Asia300 China index fell 0.5% to 1,071.43, as investors remained cautious ahead of the start of the country's annual parliament session.
The Nikkei Asia300 Singapore index fell 0.6% to 1,082.01. While the rise in U.S. bond yields weighed on real estate investment trusts, it helped a more than 1% rally in the country's largest lender DBS Group Holdings.
Keppel Corp. added 1.8%. The company said yesterday it bought back S$19.4 million worth of its shares in February, according to the latest data from the exchange.
The Nikkei Asia300 Malaysia index rose by 0.9% to 1,000, led by financials. CIMB Group Holdings rose 2.1% and Malayan Banking added 1.5%. Hong Leong Financial Group advanced 1.3%. The nation's central bank left its overnight policy rate unchanged at 3%, as was widely expected. Bank Negara Malaysia expects growth momentum to sustain and sees improved domestic demand and positive contribution from the external sector.
South Korea's gauge jumped 1.9% to 1,235.50. The county's industrial output surged by 3.3% in January month-on-month, the fastest since September 2009 and significantly higher than analyst estimates. Samsung Electronics rose more than 3%.
In South-East Asian indexes, the Nikkei Asia300 Thailand index edged lower by 0.2% to 1,215.89 and Indonesia by 0.15% to 1,226.97. Philippine index rose 1% to 980.78 and Vietnam declined 1% to 1,257.24.
Taiwan's index closed with modest gains of 0.2% to 1,239.80.
--V. Phani Kumar and Nimesh Vora