Asian shares hit 6.5 year high

Viet Nam News - - Markets -

TOKYO -— Asian shares touched a six-and-half-year peak yes­ter­day and the dol­lar was steady, with in­vestors wait­ing for sec­ond quar­ter US growth data as well as a US Fed­eral Re­serve meet­ing that some be­lieve might yield a more hawk­ish pol­icy out­look.

The Fed will not be up­dat­ing its eco­nomic fore­casts and Chair Janet Yellen will not hold a news con­fer­ence fol­low­ing the two-day pol­icy meet­ing, leav­ing in­vestors’ fo­cus squarely on a state­ment sched­uled to be re­leased at 2 PM (18:00 GMT).

Ahead of that, fi­nan­cial spread­bet­ters pre­dicted softer starts in Europe, with Bri­tain’s FTSE 100.FTSE seen open­ing 2 points lower, or down 0.03 per cent; Ger­many’s DAX to open 18 points lower, or down 0.2 per cent; and France’s CAC 40 to open 9 points lower, or down 0.2 per cent.

“Our in­dex open­ing calls are shap­ing up for a mod­estly lower open, and if sanc­tions against Rus­sia have caused in­vestor out­flows from Europe then the new sanc­tions from the EU could see this head­wind con­tinue,” Chris We­ston, chief mar­ket strate­gist at IG, said in a note.

Tues­day brought fur­ther EU and US sanc­tions against Rus­sia over Moscow’s sup­port for rebels in eastern Ukraine.

MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan shrugged off early losses in the wake of a de­cline on Wall Street to rise 0.5 per cent to its high­est level since Jan­uary 2008, while Aus­tralian shares climbed to their high­est level since June of that year.

“In the end it’s re­ally part of a global rally, it’s been un­der­pinned by the US, where eco­nomic growth is seen to be im­prov­ing al­beit slowly, and earn­ings growth in Aus­tralia looks rea­son­able at this stage,” said Matthew Sherwood, head of in­vest­ment mar­ket re­search at Per­pet­ual in Sydney.

Ja­pan’s Nikkei stock av­er­age ended up 0.2 per cent, as up­beat earn­ings off­set weaker-than-ex­pected in­dus­trial pro­duc­tion data which cast doubts over the strength of an ex­pected thirdquar­ter eco­nomic re­cov­ery.

Out­put fell 3.3 per cent in June, the fastest rate since the dev­as­tat­ing earthquake and tsunami in March 2011, as com­pa­nies put on the brakes due to a pile-up in in­ven­to­ries. But man­u­fac­tur­ers ex­pect out­put to rise in the com­ing months.

“ Macro funds in­clud­ing over­seas pen­sion funds are shift­ing to Ja­panese shares from US shares as valu­a­tions of Ja­panese shares are cheaper,” said Ky­oya Okazawa, head of global eq­ui­ties at BNP Paribas.

On Wall Street overnight, a weak out­look from courier com­pany United Par­cel Ser­vice (UPS.N) trig­gered a broad sell­off, push­ing the S&P 500.SPX below its 14-day mov­ing av­er­age for a sec­ond straight day.

Still, al­most 70 per cent of the S&P 500 com­pa­nies that have re­ported al­ready have topped earn­ings ex­pec­ta­tions, ac­cord­ing to Thom­son Reuters data, which is well above the longterm av­er­age of 63 per cent. More than half of com­pa­nies have re­ported re­sults, and over 63 per cent of them have topped rev­enue fore­casts, above the long-term av­er­age of 61 per cent.

Fed eyes cuts

Later yes­ter­day, the Fed was ex­pected to cut its monthly bond­buy­ing pro­gram by another $10 bil­lion.

Also later in the ses­sion, the Com­merce De­part­ment was ex­pected to re­port that the econ­omy grew at a 3.2 per cent an­nual pace in the sec­ond quar­ter, af­ter it shrank 2.9 per cent in the pre­vi­ous quar­ter.

On Fri­day, the La­bor De­part­ment’s key non­farm pay­rolls are ex­pected to rise by 231,000 in July af­ter an in­crease of 288,000 in June. The job­less rate is ex­pected to hold steady at 6.1 per cent.

With US un­em­ploy­ment drop­ping over the last few months and in­fla­tion firm­ing, some be­lieve the US cen­tral bank could ad­just its word­ing to sug­gest its will­ing­ness to hike in­ter­est rates sooner rather than later as the bank ap­proaches its “full em­ploy­ment” man­date.

The yield on the bench­mark 10-year US Trea­sury note US10YT RR stood at 2.467 per cent in late Asian trade, not far from its US close of 2.462 per cent on Tues­day, when it got sup­port from Ger­man, Ital­ian and Span­ish govern­ment debt yields all hit­ting record lows.

Ten-year Ger­man govern­ment bond yields, the bench­mark for euro zone bor­row­ing costs, sank as low as 1.12 per cent on Tues­day.

That helped the dol­lar rise to eight-month highs against the euro, which ex­tended the drop as low as $1.3403 EUR in Asian trade and was last steady at $1.3407.

Against the yen, the dol­lar was steady on the day at 102.12 JPY af­ter it broke above the 102 level on Tues­day for the first time since early July.

The dol­lar in­dex, which tracks the US unit against a bas­ket of six ma­jor ri­vals, was last at 80.225, af­ter touch­ing a six-month high of 81.245 on Tues­day as the euro cratered.

US crude CLc1 edged up around 0.1 per cent on the day to $101.07 a bar­rel af­ter touch­ing an in­tra­day low of $100.37 on Tues­day, its low­est since mid-July. —

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