Japan Shares Lead Asia Higher

Positive economic news from China and Australia helped lift Asian stock markets early Wednesday, while Taiwan's technology firms got a boost from Apple earnings overnight.

The Nikkei Stock Average was up 1.4%, while Hong Kong's Hang Seng Index gained 0.4% and the Shanghai Composite Index edged up 0.1%.

The Australian dollar rose against the U.S. dollar after benign domestic consumer-price data. The S&P/ASX 200 rose on the news, but has since given up its gains to trade 0.1% lower.

Australian consumer prices rose 1.0% from a year earlier, missing economists' expectations of a 1.1% rise. The Reserve Bank of Australia targets an inflation rate of between 2% and 3%.

Analysts expect the benign inflation data will give the central bank room to cut rates when it meets in August to stoke growth.

"We believe that continued low underlying inflation will prompt the RBA to eventually reduce rates to 1.0% versus 1.75% now," said Paul Dales, chief economist at Capital Economics.

In China, government data showed industrial companies' profits rose 5.1% in June from a year earlier, 1.4 percentage points faster than the pace recorded in May, while debt-to-asset ratio fell.

Taiwan's benchmark Taiex rose 0.5% as Apple's shipments for the just-ended quarter met expectations. Apple on Tuesday released better-than-expected third-quarter revenue and net income, and projected better-than-expected revenue for the next quarter.

Among Apple suppliers in Taiwan, heavyweight chip producer Taiwan Semiconductor Manufacturing rose to a record high, while lens maker Largan Precision advanced 2.6%. Hon Hai and case maker Catcher each gained more than 1%.

In Japan, a pullback in the yen helped the Japanese stock market lead gains in Asia even as investors wait for rate guidance from the U.S. Federal Reserve.

The yen was down versus the dollar Wednesday, paring some of its gains a day earlier. Asian currency pairs are hovering around their previous closing levels, awaiting a trigger from the Fed's rate decision later Wednesday.

The potential effect of the Fed meeting on Asian currencies will show up on Thursday when markets reopen. Analysts don't expect the Fed to adjust interest rates yet, but it may strike a more hawkish stance given the recent string of improved U.S. economic data and the consecutive highs seen in the U.S. stock market.

Ewen Chew, James Glynn, Rachel Pannett, and John Wu contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

July 27, 2016 01:05 ET (05:05 GMT)

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