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Asia shares trade higher after last week’s Wall Street rally

Wall Street

S&P/ASX 200 gained 0.8% to 7,637.40, Kospi soared 1.1% to 2,685.37, Hang Seng climbed 0.9% to 17,814.66, while the Shanghai Composite added 0.8% to 3,113.28

Asian shares were trading higher Monday amid optimism over the rally that ended the week on Wall Street, although eyes were on the Fed policy meeting set for later this week.

Sydney’s S&P/ASX 200 gained 0.8% in afternoon trading to 7,637.40. South Korea’s Kospi soared 1.1% to 2,685.37. Hong Kong’s Hang Seng climbed 0.9% to 17,814.66, while the Shanghai Composite added 0.8% to 3,113.28.

Trading was closed in Tokyo for the Showa Day holiday. Japan has a series of holidays coming up known as the Golden Week, through Monday.

According to Stephen Innes, managing partner at SPI Asset Management, the market mood was positive after last week’s Wall Street tech-driven rally.

The recent string of strong earnings has bolstered market sentiments, but what could be a risk factor is the declining Japanese yen, he added.

Investors will be closely monitoring the latest developments in the remarkable and volatile decline of the Japanese yen against the U.S. dollar and other major currencies, he added.

The yen hit a fresh 34-year low after the BoJ’s decision to keep interest rates unchanged Friday. That was in line with expectations, but what was unexpected was the central bank’s apparent lack of significant concern about the exchange rate, he said.

In currency trading Monday, the U.S. dollar edged up at one point to 160 Japanese yen levels, before moving downward, raising speculation of market intervention by the Bank of Japan. The central bank does not comment on such moves. The dollar cost 156.84 yen in afternoon trading. The euro cost $1.0727, up from $1.0699.

A weak yen can be a boon for Japan’s giant exporters. But a weak currency can hurt the economy in the long run because it reduces purchasing power and possible wage growth. Japan imports almost all its energy.

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