Asia stocks rise as US govt shutdown ends, dollar/yen inches down
TOKYO (Reuters) – Asian stocks advanced on Tuesday after US senators struck a deal to end a three-day government shutdown, sending Wall Street’s main indexes to record highs, while the dollar inched down against the yen after the Bank of Japan kept policy steady.
US lawmakers passed a short-term measure on Monday to fund the federal government through Feb. 8.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7 percent to a fresh record peak.
Australian stocks climbed 0.7 percent and South Korea’s KOSPI added 1 percent. Japan’s Nikkei was 1.1 percent higher.
World equity markets have been on a tear over the past year, buoyed by a synchronised uptick in global economic growth in a boon to corporate profits and stock valuations.
The brief US government shutdown put only a minor dent to equities, with Wall Street rallying to record highs overnight following the deal to end the impasse in Washington. [.N]
In currencies, the dollar briefly dipped 0.33 percent to 110.550 yen before pulling back to 110.775 for a loss of 0.1 percent.
In a widely expected move, the BOJ maintained its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.
The BOJ also said “inflation expectations have moved sideways recently,” offering a slightly more upbeat view than three months ago when it said they were on a weak note.
Still, the central bank was seen to be significantly distant from its peers who were looking for ways out of unconventional monetary policies.
“The BOJ kept is policies unchanged and made no real changes to its overall stance. It still remains a step behind other central banks looking to normalise their policies,” said Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch.
The BOJ caused ripples in the markets earlier in January by slightly reducing the amount of longer-dated Japanese government bonds (JGBs) it buys from the market at its regular debt-purchasing operations.
The yen appreciated significantly against the dollar as some interpreted the BOJ’s move as a step towards eventual policy normalisation.
Focus was on BOJ Governor Haruhiko Kuroda’s post-policy meeting news conference at 0630 GMT and how he responds to questions about where the central bank stands on its projected policy path.
The euro was effectively flat at $1.2256 after gaining 0.3 percent overnight. The common currency was within reach of a three-year peak of $1.2323 set on Wednesday.
The euro was supported ahead of the outcome of the European Central Bank’s meeting on Thursday, which could provide clues to future shifts in the central bank’s monetary policy.
The pound was steady at $1.3983 after touching $1.3992, its highest level since June 2016’s vote for Brexit, on optimism that Britain will reach a favourable divorce deal with the European Union.
The dollar index against a basket of six major currencies stood almost unchanged at 90.387.
Oil prices rose on Tuesday, lifted by healthy economic growth as well as the ongoing supply restraint by a group of exporters around OPEC and Russia. [O/R]
US crude oil futures CLc1 rose 0.6 percent to $63.96 per barrel and Brent gained 0.5 percent to $69.38 per barrel LCOc1.
Spot gold XAU= rose 0.05 percent to $1,336.12 per ounce as the dollar steadied but lacked the momentum to chalk up gains.