GLOBAL MARKETS-Asian stocks struggle to build on Wall Street gains, dollar rises

* MSCI AxJ index trades either side of flat
* Dollar strength points to persistent caution
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook and Suzanne Barlyn
SINGAPORE/NEW YORK, Sept 23 (Reuters) - Asia's stock markets
struggled to emulate Wall Street's rebound on Wednesday as
persistent worries about the global economic recovery kept
investors cautious, while ebbing inflation expectations helped
the U.S. dollar to a two-month high.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was steady after two days of declines, but the
mood was hardly bullish.
Japan's Nikkei .N225 returned from a two-day holiday to
drop 0.6%. Markets in Shanghai .SSEC and Hong Kong .HSI
opened flat, the ASX 200 <.AXJO rose 1.6% and South Korea's
Kospi .KS11 fell 0.8% on a jump in coronavirus infections.
.KS
"I think that reflects a lingering caution. The pandemic is
still a concern...non-tech stocks are still weighed down by
COVID-19," said Bank of Singapore analyst Moh Siong Sim.
Foreign exchange markets best reflected those worries and a
strong dollar kept Asia's currencies on the back foot, extending
gains that had begun with hawkish remarks from a senior U.S.
Federal Reserve official overnight. FRX/
The greenback has busted out of a downtrend that started in
March and it rose 0.2% against a basket of currencies =USD to
its highest since late July.
It gained by the same margin against the euro and yen and a
little further against the Aussie to hit a six-week peak. The
kiwi NZD=D3 flickered higher after the central bank left rates
on hold, as expected, but pressure soon returned. "There looks to be a squeeze on dollar shorts," said Westpac
FX analyst Sean Callow, with jitters in the equity markets, a
stalling euro and no new stimulus from the U.S. Federal Reserve
to keep it under pressure.
Chicago Fed President Charles Evans, due to become a voter
on the Federal Open Market Committee in 2021, said overnight
the Fed still needed to discuss its new inflation approach but
it "could start raising rates before we start averaging 2%."
That crimped inflation expectations, lifted U.S. real yields
and set the dollar rising. BAG
The drop and partial recovery of U.S. stocks this week has
lacked an immediate trigger though geopolitics, economics and
virus news has given investors plenty to worry about.
China-U.S. tensions are simmering, Britain has re-imposed
some curbs on restaurants to try and head off a second wave of
coronavirus infections and the U.S. election campaign seems to
be distracting Congress from passing further aid bills.
Wall Street's Tuesday rebound was led by a 1.7% gain in the
Nasdaq .IXIC as a broker upgrade lifted Amazon.com AMZN.O by
nearly 6%. The Dow and S&P 500 made more muted gains of 0.5% and
1% respectively. .N
Futures trade suggests there is not much conviction behind
the bounce, with S&P 500 ESc1 futures wobbling either side of
flat in Asia and Nasdaq 100 futures NQc1 down 0.5%.
"Care must be taken not to unthinkingly chartacterise this
equity bounce back as 'risk on'. It is not," said Vishnu
Varathan, head of economics at Mizuho Bank in Singapore.
"At best it is a mixed bag. More likely it was technical
buying of dips."
U.S. President Donald Trump told the United Nations General
Assembly on Tuesday that China must be held accountable for
having "unleashed" COVID-19, prompting Beijing to accuse him of
"lies" and abusing the U.N. platform to provoke confrontation.
Another flashpoint, the TikTok deal, is also flaring, with
state-backed newspaper China Daily on Wednesday calling the
Oracle and Walmart agreement to take stakes in the app "dirty
and unfair" and cast doubt on whether it would win Beijing's
support. In commodity markets, oil prices slipped after a surprise
rise in U.S. crude inventories. Brent futures LCOc1 were last
down 0.9% at $41.34 a barrel and U.S crude futures CLc1 were
down 1% at $39.41 a barrel.
Gold XAU= , which has dropped with the rising dollar, was
steady at $1,900 an ounce. GOL/

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MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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