Asia stocks edge higher as China acts on housing, yuan weakness

HONG KONG: Asian shares edged higher on Friday as China stepped up efforts to support its housing sector and stabilise the yuan, though investors remained cautious ahead of U.S. jobs data that could make or break the case for further rate hikes.

U.S. consumer spending increased by the most in six months in July, but slowing monthly inflation rates cemented expectations that the Federal Reserve would keep interest rates unchanged next month. U.S August payrolls readings later on Friday could offer more clues.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.18%, while Japan’s Nikkei was up 0.34%.

All eyes are on Beijing’s efforts to revive the crisis-hit property sector and weak consumption, which are weighing heavily on the ailing economy.

China’s factory activity surprisingly returned to expansion in August, beating estimates, a private-sector survey showed on Friday. Supply, domestic demand and employment improved, suggesting official efforts to spur growth might be having some effect

Meanwhile, the country’s central bank said on Friday it will cut the amount of foreign exchange that financial institutions must hold as reserves for first time this year, a move seen aimed at slowing the pace of recent yuan depreciation.

China’s onshore yuan surged to a high of 7.2360 per dollar in the early Asian session, its strongest since Aug. 11, before last fetching 7.2605 around 0600GMT on Friday.

That followed a Thursday announcement which lowered existing mortgage interest rates for first-time homebuyers as well as the downpayment ratio in some cities.

China’s benchmark index was up 0.59%, with the real estate gauge narrowed earlier gains to 0.40%.

Hong Kong’s cash stock market was closed for the day as super typhoon Saola approaches southern China, but Hang Seng index futures rose 0.23%.

Even though Beijing’s support measures so far are not large in scope, the fact that policymakers are announcing steps more rapidly may be giving markets confidence that authorities are now being more proactive, said Redmond Wong, Greater China market strategist at Saxo Markets in Hong Kong.

Australia’s S&P/ASX 200 index lost 0.36%.

The yield on benchmark 10-year notes rose by 1.92 basis points to 4.1102%, from 4.091%.

U.S. crude rose 0.2% to $83.80 per barrel and Brent was at $87.04, up 0.24%.

Spot gold was down 0.01% to $1,939.69 an ounce. – Reuters