Asian shares hit record high, euro near three-year top
TOKYO (Reuters) – Asian shares erased early modest losses and pushed to a fresh record high, while the euro remained within sight of a 3-year peak on rising expectations that the European Central Bank could pare its monetary stimulus.
European stock futures STXEc1 were flat, suggesting a more subdued opening for the region. DAX futures FDXc1 were up 0.1 percent, and FTSE futures FFIc1 and CAC FCEc1 each up 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 percent, extending record highs set in the previous session.
US markets were closed for a public holiday on Monday.
But Australian shares slipped 0.5 percent, as miners were pressured by weaker Chinese iron ore prices. The materials and mining index .AXMM dropped as much as 0.8 percent, with mining giants BHP Billiton Ltd and Rio Tinto Ltd each falling over 1 percent before ending off lows.
Chinese iron ore futures edged up after tumbling 2 percent on Monday, when stockpiles of the steelmaking commodity at China’s ports surged to the highest since at least 2004.
Japan’s Nikkei stock index rallied 1 percent after touching its highest intraday level since November 1991 as the yen’s recent surge took a breather, with expectations for strong corporate earnings underpinning sentiment.
“The yen’s appreciation against the dollar has stopped and this brightened sentiment, along with expectations for robust company quarterly results,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
The euro had blipped higher on Monday and German benchmark bond yields hit session highs after European Central Bank rate-setter Ardo Hansson said the central bank could end its bond purchase scheme in one go after September if the economy and inflation develop as expected.
Adding to the euro’s ascent, data showed the trade surplus in the 19-country euro area rose to its highest level in eight months, indicating companies were so far weathering the impact of a stronger currency.
The dollar index, which gauges the US currency against a basket of six major rivals, wallowed at more than three-year lows. It was last at 90.456 .DXY, after dropping as low as 90.279 on Monday, its deepest nadir since December 2014.
Against the yen, the dollar clawed back some lost ground, adding 0.3 percent to 110.82 . It fell as low as 110.32 yen on Monday, which was its weakest level since Sept. 15.
Japanese Finance Minister Taro Aso said on Tuesday that he did not see problems with the dollar weakening to around 110.80 yen, but that big swings in currencies would be problematic.
“The dollar’s problems began last week, when investors sold the dollar on expectations that the Bank of Japan might begin to taper its stimulus,” said Mitsuo Imaizumi, Tokyo-based chief foreign-exchange strategist for Daiwa Securities.
“It then continued as the euro rose on suggestions that the ECB would take further normalization steps, showing how sensitive markets are to perceived signals from central banks,” he said.
Crude oil prices were mixed after rising to their highest levels since December 2014, helped by the dollar’s recent weakness as well as signs that production cuts by OPEC and Russia are tightening supplies.
Brent crude futures LCOc1 were down 30 cents, or 0.4 percent, at $69.96 a barrel after touching a high of $70.37 a barrel on Monday.
US crude futures CLc1 were up 19 cents, or 0.3 percent, at $64.49 a barrel.