Asian shares near record high, dollar weak ahead of job, wage data

TOKYO: Asian shares inched closer to a record high on Friday as US jobs data pointed to firm economic growth although the greenback was soft as the spectre of benign inflation capped domestic bond yields.

MSCI’s broadest index of AsiaPacific shares outside Japan rose nearly 0.4 per cent to 585.0, about one per cent shy of its all-time peak of 591.5 hit in November 2007, led by gains in Australia and South Korea.

Japan’s Nikkei rose 0.9 per cent to a 26-year high.

Spread-betters see mixed opening in Europe, with Britain’s FTSE seen falling 0.1 per cent and German’s DAX edging up 0.1 per cent. MSCI’s gauge of stocks across the globe has risen 2.11 per cent so far this week, putting it on course to log its best weekly performance since a 2.12 per cent gain in midJuly.

The US ADP National Employment Report on Thursday showed US private employers added 250,000 jobs in December, the biggest monthly increase since March and well above economists’ expectations of a rise of 190,000.

That helped the Dow Jones Industrial Average sail past the 25,000-mark for the first time.

S& P 500 gained 0.40 per cent while the Nasdaq Composite added 0.18 per cent, both notching record closing highs.

The data also boosted expectations on Friday’s payroll data by the US Labor Department, where economists have forecast nonfarm job growth of 190,000 in December.

Despite signs of a strong US labour market, the dollar was soft, hovering just above its threemonth low against a basket of major currencies.

The dollar index stood at 91.877, near Tuesday’s three-month low of 91.751.

“The dollar looks very weak at the moment. And I think the reason comes down to the fact that US long-term bond yields are very low despite the Fed’s rate hikes,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman.

The 10-year US Treasuries yield stood at 2.460 per cent , below its seven-month peak of 2.504 per cent touched on Dec 21.

Those levels are little different from about a year ago, even after the Fed hiked interest rates three times last year and market expectations for another three hikes in 2018.

Capping US long-term bond yields were expectations that inflation will remain tame as wage growth has been slower than before the 2007- 2008 financial crisis.

In that regard, average hourly earnings data due at 1330 GMT, along with payroll figures, could attract more attention, given wage growth is a key factor behind inflation trends.

Economists expect US wages to have risen 2.5 per cent from a year earlier in December, the same as in November.

The euro held firm at US$1.2070, holding its gains so far this week of 0.6 per cent and coming within sight of its 2-1/2-year peak of US$ 1.2092 set in early September. — Reuters