Nikkei pow­ers to 27-year peak on weaker yen

Viet Nam News - - MARKETS -

SHANG­HAI — Ja­pan’s Nikkei raced to a 27-year high yes­ter­day on the back of a lower yen and im­proved prospects for cor­po­rate earn­ings, while op­ti­mism over the US econ­omy’s short-term out­look sup­ported broad risk ap­petite and the dol­lar.

Ja­pan’s Nikkei stock in­dex rose as high as 24,286.10 points, reach­ing its high­est lev­els since No­vem­ber 1991, on re­newed op­ti­mism about the global econ­omy and hopes of a boost to ex­porters’ earn­ings from a weaker yen. It was last up 1.5 per cent.

Shares else­where in Asia also rose, with MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan adding 0.1 per cent.

But shares in Europe are ex­pected to wa­ver af­ter Italy’s gov­ern­ment tar­geted its bud­get deficit at 2.4 per cent of gross do­mes­tic prod­uct for the next three years, de­fy­ing Brus­sels.

Mar­kets had ex­pected Ital­ian Econ­omy Min­is­ter Gio­vanni Tria to re­sist a spend­ing push by Italy’s coali­tion gov­ern­ment, which took power in June.

Fi­nan­cial spread­bet­ters ex­pect Lon­don’s FTSE to open 0.1 per cent higher at 7,553, Frank­furt’s DAX to open 0.02 per cent lower at 12,433 and Paris’ CAC to open 0.2 per cent lower at 5,530.

Shares in China were higher ahead of a week-long na­tional hol­i­day. Blue chips gained 0.8 per cent and the coun­try’s main Shang­hai Com­pos­ite in­dex was 0.7 per cent higher.

“Even though we’re at his­toric highs across a group of global in­dices, the in­ter­est­ing thing to­day and yes­ter­day is that it’s trans­lat­ing through to dol­lar strength,” said Nick Twidale, chief op­er­at­ing of­fi­cer at Rakuten Se­cu­ri­ties Aus­tralia.

“Over the last cou­ple of months, dol­lar strength and eq­ui­ties haven’t gone hand in hand, but I think be­cause of the Fed move we’ve seen that change in dy­namic,” he said.

Aus­tralian shares rose 0.7 per cent, while Seoul’s Kospi gave up ground, fall­ing 0.7 per cent af­ter hit­ting three-month highs on Thurs­day.

S&P E-mini fu­tures crept higher on Fri­day to 2,921.25 af­ter gains on Wall Street overnight.

Af­ter the Fed raised rates on Wed­nes­day, the third time this year, Fed Chair­man Jerome Pow­ell said on Thurs­day that the United States does not face a large chance of a re­ces­sion in the next two years and the Fed­eral Re­serve plans to keep grad­u­ally rais­ing in­ter­est rates.

But Citi an­a­lysts cau­tioned in a note that not all data was re­as­sur­ing.

“The Citi US Eco­nomic Sur­prise In­dex has been pushed into neg­a­tive ter­ri­tory by dis­ap­point­ing hous­ing data in the United States,” they wrote.

“The lat­est data con­firms that the hous­ing mar­ket con­tin­ues to be less than ideal. Pend­ing home sales, a lead­ing in­di­ca­tor, de­clined to the low­est level in seven months.”

Pend­ing home sales fell 1.8 per cent month-on-month ver­sus con­sen­sus ex­pec­ta­tions for a 0.5 per cent drop, they said.

The bullish out­look for the US econ­omy con­tin­ued to lift the dol­lar, which was up 0.1 per cent against the yen at 113.49, and ear­lier touched a new 2018 high of 113.63.

“There’s a cou­ple of rea­sons that the dol­lar’s go­ing to re­main pop­u­lar,” said Twidale. “One’s in­ter­est rate dif­fer­en­tials, and the other is safe haven sta­tus while we’ve got these global trade con­cerns. It’s noth­ing new, but I think we could see an ac­cel­er­a­tion.”

The euro rose 0.1 per cent to 1.1650 af­ter drop­ping more than 0.8 per cent on Thurs­day on uncer­tainty over Italy’s bud­get deficit.

The dol­lar in­dex, which tracks the green­back against a bas­ket of six ma­jor ri­vals, was up 0.06 per cent at 94.947.

US Trea­sury yields ticked lower. The yield on bench­mark 10year Trea­sury notes was at 3.0463 per cent yes­ter­day, com­pared with its US close of 3.055 per cent on Thurs­day.

The two-year yield, closely tied to ex­pec­ta­tions of higher Fed fund rates, touched 2.8310 per cent com­pared with a US close of 2.835 per cent.

US crude was 0.3 per cent higher at US$72.32 a bar­rel.

Brent crude was up 0.1 per cent at $81.79 per bar­rel.

Gold was slightly higher af­ter tum­bling 1 per cent on Thurs­day on strength in the US dol­lar, which made bul­lion more ex­pen­sive for buy­ers us­ing other cur­ren­cies.

Spot gold was up 0.14 per cent at $1,184.06 per ounce. — REUTERS

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