Asian shares move off near year lows, New Zealand holds rates steady

By Alun John

HONG KONG (Reuters) - Asian stocks edged up from a three-week low on Wednesday, but gains were capped by ongoing fears about the Delta variant of the coronavirus, which also caused New Zealand's central bank to delay a previously expected rate hike.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.73%, snapping five successive sessions of decline, but still traded only a little above year-to-date lows touched in July. Japan's Nikkei rose 0.69%.

"Investors are trying to balance the reopening of economies as vaccination rates go up, but also seeing the effects of the spreading Delta variant and that's being reflected in the slowing economic data most of which has been surprising on the downside in the last two weeks," said Kerry Craig, global market strategist at JPMorgan Asset Management.

Chinese blue chips were among Wednesday's strongest gainers, rising 0.86%, with financial firms in the lead but the risk-on mood was across the board with Hong Kong up 0.73% and Korea up 0.89%.

S&P 500 futures rose 0.08%, and in early European trades, the pan-region Euro Stoxx 50 futures gained 0.23% and FTSE futures were up 0.42%.

Earlier in the day, the Reserve Bank of New Zealand delayed a widely expected rise in interest rates as policymakers shifted gears after the country was put into a snap COVID-19 lockdown over a handful of new cases, but the bank still expects a hike before year-end.

The New Zealand dollar fell to a nine-month low of $0.6868 after the decision although it soon recovered, climbing back to $0.6933, as investors absorbed projections showing policymakers still expect to raise rates over coming months.

"They've said no go, because you've got COVID and too much uncertainty. Give it a few weeks, let the smoke clear then the tightening cycle is still on the table," said Imre Speizer, head of NZ strategy at Westpac.

Meanwhile, the dollar weakened slightly in Asia having earlier hit a nine-month high against the euro.

Minutes of a Federal Reserve policy meeting are due later on Wednesday and analysts at CBA said the dollar could rise if these suggested members are considering announcing a taper of asset purchases in September.

Oil edged up in Asian hours after falling for four sessions on worries about the rise in coronavirus cases.

U.S. crude ticked up 0.38% to $66.84 a barrel.

The yield on benchmark 10-year Treasury notes rose to 1.2767% compared to its U.S. close of 1.258% on Tuesday.

 

(Reporting by Alun John in Hong Kong; additional reporting by Tom Westbrook in Singapore; editing by Richard Pullin, Simon Cameron-Moore and Sam Holmes)