Asian markets drift as dealers await bank meetings

File photo: Wall Street investors (AFP/Spencer Platt)

The bank policymakers' gatherings are the first since last month's shock vote in Britain to leave the European Union, which led to promises around the world to provide support to financial markets.

The pledges have fanned a surge across global markets, with the Dow and S&P 500 in New York both enjoying a series of records, while strong US data has also boosted the dollar as talk of another interest rate hike resurfaces.

The Bank of Japan is widely expected to ramp up its stimulus to kickstart the struggling economy, although hoped-for helicopter money - the direct injection of cash into the economy such as people's bank accounts - is not expected to feature.

Before that, the Federal Reserve will have its meeting, at which it is tipped to hold rates, but traders will be hoping for some forward guidance on its policy plans.

"Investors are placing a lot of faith in central banks and fiscal authorities to increase stimulus and improve the growth calculus," Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, said in an e-mail to clients.

"Equity valuations are stretched but unlike bonds they are not yet at historic extremes and given that it has historically taken three rate hikes to burst equity asset bubbles, share prices should remain elevated for a while yet."

NINTENDO DIVES

Tokyo's Nikkei ended marginally lower, giving up morning gains as a rally in the dollar against the yen lost steam. The greenback bought 106.26 yen from 106.19 yen. Traders are also awaiting the start of Japan's earnings season.

Nintendo plunged almost 18 per cent on the broader Topix index after it warned that the Pokemon Go phenomenon sweeping the world would not translate into bumper profits.

By the end of last week the firm's share price had doubled in July - making it more valuable than Sony at one point - as the game proved a global hit.

But the Kyoto-based company warned in a statement late Friday that the impact of the game's success on its bottom line would be "limited" as it was developed by a US firm.

That means Nintendo's affiliate, Pokemon Company - of which it owns a one-third stake - would get only licensing fees.

Among other markets Hong Kong rose 0.1 percent, while Shanghai closed 0.1 percent higher, having drifted in and out of positive territory throughout the day. Seoul added 0.1 per cent and Sydney put on 0.6 per cent, while Singapore eased 0.4 per cent and Taipei dipped 0.2 per cent.

On forex markets the pound edged up to US$1.3124 from US$1.3112, having tumbled Friday following data indicating British manufacturing activity had shrunk in July, fuelling worries the economy is contracting after the Jun 23 vote to leave the EU.

In early European trade London slipped 0.1 per cent, Frankfurt added 0.4 per cent and Paris was flat.

KEY FIGURES AT 0800 GMT

Tokyo - Nikkei 225: DOWN 0.04 per cent or 6.96 points at 16,620.29 (close)

Hong Kong - Hang Seng: UP 0.13 per cent at 21,993.44 (close)

Shanghai - Composite: UP 0.1 per cent at 3,015.83 (close)

London - FTSE 100: UP 0.1 per cent at 6,735.58

Euro/dollar: DOWN at US$1.0963 from US$1.0976

Pound/dollar: UP at US$1.3124 from US$1.3112

Dollar/yen: UP at 106.26 yen from 106.19 yen

New York - DOW: UP 0.3 per cent at 18,570.85 (close)