ASXCD ASX Limited

A bounce in oil prices supported major Asian benchmark indexes on Friday, though the prospect of higher U.S. interest rates again weighed on some markets in the region.

China-related stocks were up 1.5% in Hong Kong and the Hang Seng Index gained 1.3%. Australia's S&P ASX 200 was up 0.6%, while the Shanghai Composite Index gained 0.1% and the Nikkei Stock Average edged up 0.2%.

But stocks in the Philippines slumped 1.3% and in Indonesia, the benchmark JSX was down 0.2%. These two markets have suffered the most in Asia this week because of the stronger dollar.

Investors in the region have grappled with concerns ranging from the Federal Reserve's decision on monetary policy in June to continued volatility in the oil market and uncertainty around how Japanese authorities will halt the strength of the yen. That has weighed on shares in the region, which have slipped since late April. The MSCI Asia Pacific stock benchmark is currently trading around levels from mid-2014.

"Investors are worried that if there is a rate hike in June, the [U.S.] economy may not be able to support it," said Bernard Aw, market strategist with brokerage IG.

Rhetoric from officials on the yen could dial up in the coming days as the Group of Seven countries meets this week in Sendai, Japan. Washington and Tokyo are heading toward a standoff over exchange rates, with Bank of Japan Gov. Haruhiko Kuroda saying Thursday he would act quickly if the yen's rise threatened his inflation goal.

Overnight Thursday, comments from two Fed officials, William Dudley and Jeffrey Lacker, strengthened expectations that the central bank would increase rates this summer. The possibility had already gained more traction after recent data showed improvement in the U.S. economy and after the Fed released its latest meeting minutes Wednesday.

The prospect of a rate increase have sent Asian currencies to multi-month lows. Indonesia's rupiah fell to a fresh three-month low on Friday, although the dollar was a touch weaker against a basket of global currencies compared with its level in the previous session.

Expectations about higher returns in the U.S. have sapped money flows away from riskier assets. Investors pulled a net $626 million from Asian mutual funds in the week ending May 18, with $435 million of that from China funds, according to Citi Research.

Still, an increase of around 1% in Brent crude-oil prices in Asian trading Friday helped lift resource plays. Energy shares were up 0.9% in Hong Kong. China Shenhua Energy gained 3.5% and China Petroleum and Chemical Corp, or Sinopec, rose 1.3%.

IG's Mr. Aw said the dollar's recent rally has capped oil prices below the $50-a-barrel mark that traders are watching. Brent was last at $49.24 a barrel.

In Australia, shares of Oil Search Ltd. were up 2.5% after the company announced a $2.2 billion deal to buy U.S.-listed InterOil Corp.

Ewen Chew contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

May 20, 2016 00:55 ET (04:55 GMT)

ASX (ASX:ASXCD)
Historical Stock Chart
From Nov 2024 to Dec 2024

ASX (ASX:ASXCD)
Historical Stock Chart
From Dec 2023 to Dec 2024