Asia stocks near decade highs on buoyant Wall Street, kiwi rallies
TOKYO (Reuters) – Asia stocks hovered near a decade high on Thursday following another record breaking day on Wall Street, while the New Zealand dollar rallied as hawkish-sounding statements by the country’s central bank boosted the recently battered currency.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3 percent and in close reach of a 10-year high set the previous day.
Australian shares rose 0.4 percent and to their highest level since January 2008 while South Korea’s KOSPI added 0.2 percent. Shanghai advanced 0.1 percent and Hong Kong’s Hang Seng climbed 0.6 percent. Japan’s Nikkei gained 1.4 percent, reaching a high not seen since January 1992.
Wall Street rose overnight thanks to a rally by videogame makers, with all three major indexes closing at record highs. “It is a case of equity markets in emerging economies, already firm on internal demand and growth, being lifted by gains in those of developed economies,” said Kota Hirayama, senior economist at SMBC Nikko Securities in Tokyo.
“Each country obviously has its own particular factors affecting local markets, but US equities continue to drive overall risk sentiment.”
In currencies, the New Zealand dollar was a big mover, surging about 1 percent to a two-week high of $0.6974 before last trading at $0.6951.
The kiwi flew after the Reserve Bank of New Zealand (RBNZ) said early on Thursday that added fiscal stimulus and a lower local dollar would lead to faster inflation and likely an earlier rise in interest rate.
The central bank held rates steady at 1.75 percent as widely expected. The New Zealand dollar had sunk to a five-month low of $0.6818 in late October as a change in government unsettled investors.
The dollar index against a basket of six major currencies was steady at 94.899, staying below a three-month high of 95.150 set in late October.
It had reached that peak on hopes towards US tax reforms being enacted. But recent uncertainty over the fate of the tax reform plans have weighed on the dollar.
A US Senate tax-cut bill, differing from one in the House of Representatives, was expected to be unveiled on Thursday, complicating a Republican tax overhaul push and increasing scepticism on Wall Street about the effort.
“There’s very much a risk of disappointment. The US dollar could go through a weakening phase on the back of uncertainty around that tax reform,” said Steven Dooley, currency strategist for Western Union Business Solutions in Melbourne.
The greenback edged up 0.1 percent to 113.980 yen, pulling away from a one-week low of 113.395 plumbed overnight, as long-term US yields bounced back from three-week troughs.
The euro was little changed at $1.1594 and in sight of a 3-1/2-month low of $1.1553 set at the week’s start.
US crude oil futures was up 0.25 percent at $56.92 a barrel. Government data showing a rise in domestic crude production had weighed on oil overnight but rising tensions in the Middle East limited the losses.
US crude rose to $57.92 on Wednesday, highest since July 2015, as tension flared between Saudi Arabia and Iran, while the Saudi crown prince tightened his grip on power. Brent crude gained 0.25 percent to $63.65 per barrel to edge back towards a 2-1/2-year high of $64.65 scaled on Tuesday.
Spot gold was little changed at $1,280.66 an ounce. The precious metal had risen to a three-week high of $1,287.13 an ounce the previous day as a potential delay in the US tax reform plan was seen moderating the Federal Reserve’s interest rate hikes next year and support non-yielding gold.