Taiwan and Japan lead Asian shares higher, currencies steady

Updates at 0548 GMT

By Roushni Nair

Jan 22 (Reuters) –Shares in Japan and Taiwan led the charge in Asia on Monday after corporate earnings fuelled a big rally in the S&P 500 to an all-time high in the last session, while currencies in the Southeast Asian region largely traded mixed.

Japan’s Nikkei .N225 closed 1.62% higher, a level not seen since February 1990, notching an intraday high of 36,571.80 in the final 5 seconds of trading. The index has already added more than 9% in value so far this year.

Every sector, except energy stocks, rallied with 185 of the index’s 225 components advancing.

The Bank of Japan’s (BOJ) two-day meeting begins on Monday.

Wagers for an exit from negative rates at this meeting have been wound down in the wake of the New Year’s Day earthquake on Japan’s west coast alongside dovish BOJ commentary.

Shares in Taipei .TWII followed suit to add as much as 1.06%, their highest since Jan. 2. The majority of gains on the stock exchange were driven by the tech sector, with Quanta Computer Inc 2382.TW topping the benchmark, jumping more than 8%.

The gains were sparked last week by Taiwanese chipmaker Taiwan Semiconductor Manufacturing 2330.TW, the world’s largest contract chipmaker, after it projected more than 20% growth in 2024 revenue on booming demand for high-end chips used in AI.

Other markets largely traded higher, with shares in Manila .PSI and Kuala Lumpur .KLSE advancing 0.9% and 0.4%, respectively, while stocks in Bangkok .SETI dropped 0.6%.

Asian currencies, on the other hand, wavered for direction as the dollar struggled to hold its data-spurred gains from last week, ahead of monetary policy decisions by major central banks in Japan and Europe.

The dollar index =USD was largely flat at 103.16. USD/

The dollar rally may pause this week given the absence of any major U.S. data or Federal Reserve speakers, analysts at BBH Global Currency Strategy wrote.

“EM FX may get a temporary reprieve but if the data continue to come in strong, the broad dollar rally should continue,” the note added.

Back in Asia, the Taiwanese dollar TWD=TP advanced 0.5%, while the Chinese yuan CNY=CFXS and the Thai baht THB=TH traded flat. Malaysian ringgit MYR= fell slightly by 0.2%.

The Monetary Authority of Singapore meets this week, with markets pricing in no changes to policy settings, while analysts at BBH predict Bank Negara Malaysia to keep rates on hold at 3.00%.

“While the MAS does not have an explicit inflation target, falling inflation should allow it to loosen policy at its April meeting,” BBH analysts said in a note.

Separately, the Chinese central bank skipped interest rate cuts in its market operations, while offshore yuan funding costs surged to their highest in nearly four months.

HIGHLIGHTS:

** Foreign investment flows into China shrink 8.0% in 2023

** Malaysia’s Dec CPI rises 1.5% on-year, in line with forecast

** Markets in India were closed for a public holiday

Reporting by Roushni Nair in Bengaluru; Editing by Sonali Paul and Rashmi Aich