By Ese Erheriene

Nikkei rises despite poor economic data; oil firms gain on higher crude prices

Investors regained their appetite for Asian equities on Tuesday, boosted by fresh highs in U.S. markets ahead of Donald Trump's speech to Congress.

The Nikkei Stock Average was up 0.6% in early trading, shrugging off poor economic data. Japan posted its first drop in industrial output in six months in January, as production of cars fell and the Lunar New Year holiday lowered demand from China, an important export market.

Elsewhere, Australia's S&P/ASX 200 was 0.4% higher, Korea's Kospi added 0.3%, and Hong Kong's Hang Seng Index was last up 0.1%.

Overnight in the U.S., a rally in energy, financial and biotechnology shares lifted the major indexes. The Dow Jones Industrial Average rose 16 points to close at its 12th consecutive record high, the S&P 500 rose 0.1%, and the Nasdaq Composite added 0.3%.

Rebounding from sharp losses in the previous session, Asian stock markets were back in the black in anticipation of Trump's speech to Congress on Tuesday, following a budget proposal from the White House on Monday that would boost military spending by around $20 billion.

"The market is currently holding this wait-and-see attitude," said Jingyi Pan, a market strategist at IG Group. "There will be a few things that the market will hunt for in his address today. These include tax, infrastructure and trade policies."

Meanwhile, hawkish comments from Federal Reserve Bank of Dallas President Robert Kaplan overnight renewed market expectations for more U.S. rate increases in the coming months. According to CME data, the likelihood of a rate rise in March is 33.2%, up from 26.6% the previous day.

Kaplan's comments proved bullish for Treasury yields and dollar strength against the yen overnight, which gave an updraft to local financial companies and exporters. Among individual shares, Australia's Big Four banks -- which account for roughly a third of the benchmark index's weighting -- were up between 0.7% and 1.4%. In Japan, Nomura (8604.TO) was up 1.9% and Dai-ichi Life (8750.TO) gained 1.1%, while auto makers Honda Motor (HMC) and Mazda Motor (7261.TO) added 1.0% and 1.9%, respectively.

In the commodities market, oil prices rose 0.2%, building on gains in the U.S. session. This supported the bottom lines of oil and gas firms across the region. Japan Petroleum Exploration (1662.TO) was 2.6% higher, Australia's Santos (SSLTY) was up 2.5% and Hong Kong-listed oil major China Petroleum & Chemical (600028.SH) rose 0.2%.

In currencies, the dollar-yen pair saw some profit-taking, with the dollar recently down 0.1% at Yen112.59 from a high of Yen112.82 yen in early Tokyo trade. Along with some profit-taking, there may have been trades to position ahead of Trump's speech, said Masahi Murata, a senior currency strategist at Brown Brothers Harriman.

Looking ahead, market participants will be watching out for the second estimate of French fourth-quarter gross domestic product later in the global trading day, and positioning for Chinese manufacturing data on Wednesday.

(END) Dow Jones Newswires

February 27, 2017 22:56 ET (03:56 GMT)