Asian stocks hit 10-year high
TOKYO (Reuters) – Asian stocks rose to a 10-year high yesterday as investors took heart from further evidence of strength in the global economy, while the dollar hovered near a one-week high against its peers thanks to higher US yields and a floundering euro.
European markets were expected to be somewhat more subdued in early trade, with financial spreadbetters expecting Britain’s FTSE to open 0.05 percent higher and Germany’s DAX and France’s CAC to open unchanged.
Gains on Wall Street overnight helped MSCI’s broadest index of Asia-Pacific shares outside Japan rise 0.8 percent to a fresh decade-high.
Japan’s Nikkei advanced 0.7 percent, while South Korea’s KOSPI . rose 0.1 percent and Australian stocks climbed 0.3 percent. Shanghai added 0.5 percent and Hong Kong’s Hang Seng was 1.3 percent higher.
Equity markets have enjoyed strong support this year thanks to rising corporate earnings on the back of an improving global economy.
That confidence was again on display overnight, with upbeat data in Germany helping the benchmark DAX brush off worries over the collapse of German coalition government talks.
German data showed strong industrial activity, while the Conference Board’s leading economic index for the United States rose 1.2 percent in October, double the rate economists polled by Reuters had expected.
Wall Street was led up by telecom and tech shares, with the Dow edging back towards record highs scaled two weeks ago.
In currencies, the dollar index against a basket of six major currencies stood near a one-week peak of 94.104 touched overnight.
The greenback was boosted by rising bond yields, with the two-year US Treasury yield touching a nine-year high of 1.755 percent overnight.
The yield has risen as investors priced in more interest rate hikes by the Federal Reserve, while the Treasury is expected to increase debt issuance with a focus on short- and intermediate-dated maturities.
“The two-year yield appears to have risen too high now, as the Fed is only likely to hike rates twice at most next year considering current trends in US wages and prices,” said Makoto Noji, senior strategist at SMBC Nikko Securities.
The dollar was also lifted as the euro has been weakened by political risks arising from German chancellor Angela Merkel’s failure to form a three-way coalition government, thrusting Europe’s biggest economy into a political Merkel, were crisis. whose weakened conservatives after they won an election in September with a reduced number of seats, said she would inform the German president that she could not form a coalition, Free Democrats after the pro-business withdrew from negotiations. “So another gray cloud has formed over euroland for investors to worry about. The euro may slide more in the days ahead unless a solution to Germany’s government can be found, fast,” wrote Carl Weinberg, chief economist at High Frequency Economics. The euro inched up 0.1 percent to $1.1745 but remained near a six-day low of $1.1722 touched on Monday. A week ago, the common currency had rallied to a one-month high of $1.1862 on robust German growth data. The dollar was steady at 112.545 yen having bounced from a one-month low of 111.890 set overnight.