Asian shares rise to two-week highs

Japanese shares rose and the yen fell over-night after a report said Prime Minister Shinzo Abe is considering a corporate tax cut to help offset the impact of a planned two-stage increase in the sales tax, while gold eased but held near three-week highs.

Abe is trying to spur growth and pull the world's third-largest economy out of 15 years of deflation with expansive fiscal and monetary policies, dubbed as "Abenomics". The Nikkei newspaper quoted government sources as saying Abe has called for a study on lowering the corporate tax rate as a way of easing the burden on Japanese companies and attracting foreign investment.

“The media report on Abe’s move to consider lowering the corporate tax is positive for the stock market,” said Mitsushige Akino, a fund manager at Ichiyoshi Asset Management. Tokyo’s Nikkei share average climbed 1.4 per cent in light volume, rebounding after it fell to its lowest since end-June following Monday’s slower-than-expected GDP data. The yen slipped 0.4 per cent to 97.240 yen to the dollar, pulling further away from a seven-week high of 95.810 touched last week. Driven by hopes of Abenomics, the benchmark Nikkei has risen 32 per cent this year, while the yen has fallen 12 per cent versus the dollar.

Dollar steady before data

Against a basket of major currencies, the dollar was up 0.1 per cent, extending gains into a third day in anticipation that US data will point to the Federal Reserve rolling back its $85 billion monthly stimulus programme sooner rather than later. The next test of this view will be Tuesday’s retail sales data, which most expect to be strong. “Better economic data from China last week has left Asia ex-Japan with a positive tone. Now it will be the turn of the US to show what it can do with some retail therapy,” Societe Generale wrote in a note.

Asian shares as measured by MSCI Asia-Pacific ex-Japan index rose 0.4 per cent to a two-week high, extending Monday’s gain on the back of last week’s upbeat Chinese factory output data, while South Korean shares advanced 0.9 per cent.

In the commodities markets, copper prices added 0.2 per cent to around $7,265 a tonne, after slipping 0.3 per cent on Monday. Gold eased 0.1 per cent after surging as much as 2.2 per cent to a three-week high on Monday. Brent crude prices edged up 0.1 per cent to just above $109 a barrel, extending the previous session’s 0.7 per cent rise to a one-week high on concerns over supply disruption from Libya.

Reuters