Asia stocks reach 10-year peak on global equity surge,
Send a link to a friend
[October 12, 2017]
By Shinichi Saoshiro
TOKYO (Reuters) - Asian stocks reached a
10-year high on Thursday, riding the bull run in global equity markets,
while the dollar sagged after the Federal Reserve showed a more guarded
view towards inflation.
Spreadbetters expected a mixed start for European stocks, forecasting
Britain's FTSE to open down 0.05 percent, Germany's DAX to start 0.03
percent higher France's CAC to open flat.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.55
percent and at its highest since December 2007.
Japan's Nikkei was up 0.4 percent after brushing 20,994.40, its highest
since November 1996. South Korea's KOSPI added 0.55 percent to mark a
fresh record peak and Hong Kong's Hang Seng scaled a decade-high.
Asia took cues from Wall Street, where major indexes rose to yet another
set of record closing highs overnight following a report that a
market-friendly candidate was being pushed as successor to Janet Yellen
at the helm of the Fed.
Broader investor risk sentiment has improved this week after Catalonia
dialed back plans to break away from Spain, with MSCI's 47-country world
stocks index reaching a record high.
Global equities now appear to be taking geopolitical developments such
as the secessionist push in Spain and tensions on the Korean peninsula
in their stride, to reach those record tops.
"Fundamentally, the global economy is in decent shape. Corporate
sentiment is also sound as evidenced by strong data like the Chinese PMI,
U.S. ISM and Japanese tankan. All these factors are leading to the rise
in global stocks," said Masahiro Ichikawa, senior strategist at Sumitomo
Mitsui Asset Management in Tokyo.
"Financial markets will remain wary of geopolitical headlines. But
barring actual military conflicts, negative responses by equities are
expected to be short-lived."
The dollar index against a basket of six major currencies slipped to a
two-week low of 92.821 following the release of the minutes from the
Fed's last policy meeting on Sept. 19-20.
Fed policymakers had a prolonged debate about the prospects of a pickup
in inflation and the path of future interest rate rises if it did not,
the minutes showed.
While this did little to cool expectations for the Fed to raise interest
rates in December, it did make the central bank appear slightly less
hawkish than it seemed right after the September policy meeting when it
signaled the year-end monetary tightening.
[to top of second column]
People walk past an electronic stock quotation board outside a
brokerage in Tokyo, Japan, September 22, 2017. REUTERS/Toru Hanai
The dollar was particularly weak against the euro as relief over Catalonia
stopping short of a formal declaration of independence supported the common
The euro rose to $1.1879, its highest since Sept. 25 and on track for a fifth
straight day of gains.
The dollar was little changed at 112.360 yen, having bounced back from a
two-week trough below 112.000 plumbed earlier this week.
The U.S. currency was seen to have found support after a media survey showed
that Japanese Prime Minister Shinzo Abe's ruling party could come close to
keeping its two-thirds "super" majority in an Oct. 22 lower house election.
Such an electoral outcome would suggest a continuation of Abe's reflationary
economic policies, said Heng Koon How, head of markets strategy for United
Overseas Bank in Singapore.
"It means that the Bank of Japan's quantitative easing will continue, that will
keep the yen on balance weak and so it supports dollar/yen," Heng said.
The Mexican peso stood firm at 18.688 pesos per dollar. It had gained 0.7
percent overnight to pull away from a five-month low of 18.852, although the
currency was seen coming under renewed pressure if the ongoing North American
Free Trade Agreement (NAFTA) talks run aground.
The United States, Mexico and Canada have negotiated this week to reform NAFTA.
There are concerns that U.S. President Donald Trump could opt to withdraw from
the pact if his demands for more favorable treatment are not met.
In the mean time the Canadian dollar gained against the broadly weaker dollar.
It extended overnight gains to reach C$1.2440 per dollar, its strongest in two
In commodities, oil prices eased as U.S. fuel inventories rose despite efforts
by OPEC to cut production and tighten the market.
Brent crude futures were down 0.55 percent at $56.63 per barrel and poised to
end a three-day winning streak.
Spot gold edged up to a 15-day high of $1,295.45 an ounce, supported by a weaker
(Additional reporting by Masayuki Kitano in Singapore; Editing by Sam Holmes)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.