Asia stocks hit decade high

Asian shares hit decade highs on Monday and the dollar gained on the yen early in a week in which the US Federal Reserve is likely to wrestle with its bloated balance sheet as part of a long reversal of super-cheap money worldwide.

SYDNEY — Asian shares hit decade highs on Monday and the dollar gained on the yen early in a week in which the US Federal Reserve is likely to wrestle with its bloated balance sheet as part of a long reversal of super-cheap money worldwide.

European and US stocks looked set to echo those gains, with Eurostoxx 50 futures up 0.46% and the FTSE 0.43%, while E-Mini futures for the S&P 500 rose 0.25%.

There was relief the weekend passed with no new provocation by North Korea, though Pyongyang’s nuclear ambitions will be center stage when US President Donald Trump addresses world leaders at the United Nations on Tuesday.

Some details of Mr. Trump’s tax reform plans may also emerge this week, while elections in Germany and New Zealand will add extra political uncertainty to the mix.

MSCI’s broadest index of AsiaPacific shares outside Japan rose 0.90% to reach heights not visited since late 2007.

Samsung Electronics led the gains to reach an all-time top as global demand for hi-tech gadgets remains strong, while health care and financial stocks also drew buyers.

Australia’s index added 0.50% while Japan’s Nikkei was closed for a holiday.

For markets, the main event will be the Fed’s meeting on Tuesday and Wednesday, where it is likely to take another step toward policy normalization amid what is rapidly becoming a global trend.

Canada has already hiked twice in recent months and the Bank of England shocked many last week by flagging its own coming increases.

Yet investors are far from convinced the Fed will move on rates again this year, with December put at less than a 50% probability in the futures market.

“It is fair to say that in our recent travels most of the investors we have spoken to question not just a December hike, but whether the Fed will hike at all again this cycle,” said Tom Porcelli, chief US economist at RBC Capital Markets. “When you press investors on the why, the standard reply is the lack of inflationary pressures.”

Mr. Porcelli, however, argued the market was underestimating the risk of tightening and predicted not only a hike in December but four more over 2018.

Yields on US 10-year Treasuries did jump a hefty 14 basis points last week, and still trailed the UK where yields on 10-year paper surged 30 basis points.

The dollar held firm on the yen at ¥111.20, with the Bank of Japan widely expected to maintain its massive asset buying campaign at a meeting on Thursday.

Against a basket of currencies, the dollar was idling at 91.869 and still uncomfortably close to the recent two- and- a- half- year trough of 91.011. —