Tokyo — Asian stocks rose to three-and-a-half-month highs
on Thursday, cheered by the Dow Jones Industrial Average breaching the
20,000-level for the first time, although concern about US President
Donald Trump’s protectionist stance kept the dollar on the defensive.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7% to its highest since October 11.
South Korea’s Kospi advanced 0.9%, Hong Kong’s Hang Seng climbed 1.2% and Shanghai edged up 0.2%. Japan’s Nikkei brushed aside a stronger yen to rise 1.4%.
"Today’s excitement mainly comes from strong US stocks overnight, but people are also positive about Japanese companies’ earnings especially machinery manufacturers," said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.
The Dow closed atop the 20,000 mark for the first time overnight as solid earnings and optimism over Trump’s pro-growth initiatives revitalised a post-election rally.
Safe-haven US treasuries were duly sold as risk aversion ebbed and the benchmark 10-year note yield rose to a four-week high on Wednesday. Subdued investor demand at a five-year auction also hurt treasuries.
The dollar, which often draws support from higher treasury yields, failed to follow suit. An index tracking the greenback against a basket of major currencies slid to a seven-week low of 99.793 on Thursday.
Unlike equities, the currency markets focused more on Trump’s trade protectionism and the negative effect it could have on the dollar.
"The problem that the greenback is having right now is twofold — first Trump has been talking down the currency and second, his policies make foreign investors nervous," wrote Kathy Lien, MD of forex strategy for BK Asset Management.
"Until the market comes to terms with the risk/benefits of Trump policy, the dollar may have a tough time mimicking the one-way moves in stocks and bonds."
The dollar was little changed at ¥113.425 after losing 0.5% overnight.
It had soared to a 10-month high of ¥118.660 in mid-December at the apex of the dollar-boosting Trump trade, when the market focus was on bets of more fiscal stimulus and reflationary measures under the new administration.
The euro was steady at $1.0755 after gaining 0.2% the previous day. The common currency had risen to a one-and-a-half-month high of $1.0775 on Tuesday against the struggling dollar.
The pound extended its overnight rally and touched a six-week high of $1.2648.
Sterling has drawn its latest boost from the expectation that British Prime Minister Theresa May’s upcoming meeting with Trump would pave the way for a rapid US trade deal, which may offset some of the damage from its looming divorce with the EU.
In commodities, crude oil prices bounced amid the dollar’s weakening after falling the previous day on data showing a build in US crude inventories.
US crude was up 0.9% at $53.20 a barrel after losing 0.8% the previous day. Brent added 0.9% to $55.57 a barrel.
A weaker greenback tends to favour non-US buyers of dollar-denominated commodities like crude.
Gold was on track for a third consecutive day of losses as the risk-on mood in the global markets reduced demand for the precious metal. Spot gold was down 0.1% at $1,198.60/oz, pulled back from a two-month high of $1,219.59 scaled on Tuesday.
Reuters |BDlive
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7% to its highest since October 11.
South Korea’s Kospi advanced 0.9%, Hong Kong’s Hang Seng climbed 1.2% and Shanghai edged up 0.2%. Japan’s Nikkei brushed aside a stronger yen to rise 1.4%.
"Today’s excitement mainly comes from strong US stocks overnight, but people are also positive about Japanese companies’ earnings especially machinery manufacturers," said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.
The Dow closed atop the 20,000 mark for the first time overnight as solid earnings and optimism over Trump’s pro-growth initiatives revitalised a post-election rally.
Safe-haven US treasuries were duly sold as risk aversion ebbed and the benchmark 10-year note yield rose to a four-week high on Wednesday. Subdued investor demand at a five-year auction also hurt treasuries.
The dollar, which often draws support from higher treasury yields, failed to follow suit. An index tracking the greenback against a basket of major currencies slid to a seven-week low of 99.793 on Thursday.
Unlike equities, the currency markets focused more on Trump’s trade protectionism and the negative effect it could have on the dollar.
"The problem that the greenback is having right now is twofold — first Trump has been talking down the currency and second, his policies make foreign investors nervous," wrote Kathy Lien, MD of forex strategy for BK Asset Management.
"Until the market comes to terms with the risk/benefits of Trump policy, the dollar may have a tough time mimicking the one-way moves in stocks and bonds."
The dollar was little changed at ¥113.425 after losing 0.5% overnight.
It had soared to a 10-month high of ¥118.660 in mid-December at the apex of the dollar-boosting Trump trade, when the market focus was on bets of more fiscal stimulus and reflationary measures under the new administration.
The euro was steady at $1.0755 after gaining 0.2% the previous day. The common currency had risen to a one-and-a-half-month high of $1.0775 on Tuesday against the struggling dollar.
The pound extended its overnight rally and touched a six-week high of $1.2648.
Sterling has drawn its latest boost from the expectation that British Prime Minister Theresa May’s upcoming meeting with Trump would pave the way for a rapid US trade deal, which may offset some of the damage from its looming divorce with the EU.
In commodities, crude oil prices bounced amid the dollar’s weakening after falling the previous day on data showing a build in US crude inventories.
US crude was up 0.9% at $53.20 a barrel after losing 0.8% the previous day. Brent added 0.9% to $55.57 a barrel.
A weaker greenback tends to favour non-US buyers of dollar-denominated commodities like crude.
Gold was on track for a third consecutive day of losses as the risk-on mood in the global markets reduced demand for the precious metal. Spot gold was down 0.1% at $1,198.60/oz, pulled back from a two-month high of $1,219.59 scaled on Tuesday.
Reuters |BDlive
No comments:
Post a Comment