Asian markets mixed as traders struggle to keep rally's momentum

Asian investors battled to push markets higher again Wednesday following another healthy run-up on Wall Street boosted by more positive earnings results that raised hopes for the reporting season.

However, while there is a more upbeat mood on trading floors for now, analysts warned that the current rally could soon turn as central banks press on with their interest rate hikes aimed at fighting multi-decade-high inflation.

Forex traders were also keeping tabs on the yen as it edges closer to 150 per dollar, with Japanese officials holding off a second intervention in as many months but saying they are ready to act when necessary.

All three main indexes in New York enjoyed back-to-back gains as investors were heartened by forecast-beating results from Goldman Sachs and Johnson & Johnson.

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They came on the heels of better-than-expected reports from banking giants Citi, JP Morgan and Wells Fargo.

Traders were given an extra boost by news that Netflix gained more than two million subscribers in July-September, easing worries about the impact of rising borrowing costs on consumers.

"Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream," Art Hogan, a strategist at B. Riley, said.

"A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower."

Still, Asian markets were mixed in early trade, with profit-takers weighing on Hong Kong after a healthy three-day run-up, while there were also losses in Shanghai, Taipei, Manila and Jakarta.

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Tokyo, Sydney, Seoul, Singapore and Wellington rose.

'Volatility up'

SPI Asset Management's Stephen Innes warned there were still plenty of issues keeping a cap on equities including sticky inflation, weak sentiment, hawkish central banks, the Ukraine war, China's economic woes and "a non-stop drum beat of recessionary rhetoric from vocal market participants".

"The key to equity markets is (Federal Reserve) certainty, and that is the crucial turn on the road before the rates markets can settle back into a groove and Treasury volatility can decline," he added.

"But for that to happen, the US data needs to roll over. Given the much hotter-than-expected inflation data, the Fed may do the opposite of what the market wants -- turning volatility up again."

On currency markets, eyes were now on Tokyo as the yen hovers just above 149 per dollar, with finance minister Shunichi Suzuki saying "we'll respond appropriately against excessive moves".

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The unit is much weaker than the 145.90 level it touched last month before authorities stepped in, and analysts said they would likely act before it passes 150.

"If dollar-yen rises past the symbolic 150 level, price action will naturally accelerate, so they probably want to halt it before then or buy time," said Yuji Saito of Credit Agricole CIB.

Crude rose on renewed supply worries, having slumped Tuesday on bets that US President Joe Biden will order the release of more barrels from emergency reserves in order to keep fuel prices subdued heading into the winter and mid-term elections.

Key figures around 0230 GMT

Tokyo - Nikkei 225: UP 0.7 percent at 27,353.87 (break)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 16,781.79

Shanghai - Composite: DOWN 0.4 percent at 3,067.39

Pound/dollar: UP at $1.1344 from $1.1332 on Tuesday

Dollar/yen: DOWN at 149.17 yen from 149.21 yen

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Euro/dollar: DOWN at $0.9859 from $0.9862

Euro/pound: UP at 86.92 pence from 87.01 pence

West Texas Intermediate: UP 1.5 percent at $84.02 per barrel

Brent North Sea crude: UP 0.9 percent at $90.82 per barrel

New York - Dow: UP 1.1 percent at 30,523.80 (close)

London - FTSE 100: UP 0.2 percent at 6,936.74 (close)

Source: AFP