Asia shares hit historic highs, dollar slips anew

SYDNEY: Asian shares hit historic highs yesterday after Wall Street extended its record-breaking run, while the US dollar retreat continued as investors priced in the risk of tighter policies elsewhere in the developed world.

Activity was restrained somewhat as a US holiday curbed trade in cash Treasuries, though E-Mini futures for the S&P500 still made gains of 0.26 per cent.

MSCI’s broadest index of AsiaPacific shares outside Japan rose 0.7 per cent, having finally cleared the former all-time top of 591.50 from late 2007.

Australia’s main index firmed 0.1 per cent, while Japan’s Nikkei added 0.3 per cent.

Stocks in Hong Kong jumped 0.9 per cent from Friday’s record closing high.

Investors were optimistic that Chinese gross domestic product data for the December quarter due on Thursday would show growth of at least 6.7 per cent for the world’s second biggest economy.

Wall Street was on a roll as the fourth-quarter earnings season kicked off with solid results from banks and robust retail sales, driving investor optimism about economic growth.

The Dow amassed gains of 2 per cent last week, while the Nasdaq gained 1.8 per cent and the S&P 500 1.6 per cent.

The S&P 500 and Nasdaq scored eight record closing highs out of the first nine trading days of 2018, while the Dow boasted its sixth closing high of the year.

Earnings for S&P 500 companies are expected to increase on average by 12.1 per cent in the quarter, with profit for financial services companies likely to increase 13.2 per cent, according to Thomson Reuters I/B/E/S.

“The big consensus trade of being short US dollars into 2018 and long European and US financials continues to work in earnest and this remains the key focal point in the week ahead,” said Chris Weston, chief market strategist at broker IG.

“The decline in the USD index was actually the biggest sell-off since 27 June, with prices closing below the Sept. 8 low. It just shows how much sway the USD bears have right now.”

The dollar index showed no sign of bouncing early on Monday, instead edging down to a fresh trough at 90.622. — Reuters