Asian shares yesterday jumped to the highest in a decade as Wall Street scaled to all-time highs, while the dollar loitered around two-week lows on worries that US President Donald Trump’s tax plan could stall.
Japan’s Nikkei closed at the highest level since 1996, even as scandal-hit Kobe Steel extended losses.
Futures pointed to a steady start for European shares already at all-time peaks with e-mini futures almost unchanged in Asian trading.
The MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.4 percent to a level not seen since December 2007. South Korea’s KOSPI surged 0.9 percent to its highest level ever, tracking the global rally.
Sentiment was boosted after the IMF upgraded its global economic growth forecast for this year and next year, driven by a pickup in trade, investment, and consumer confidence.
“A risk-on mood has set in and money is flowing out of bond funds into equities funds,” Atlas Funds Management chief investment officer Hugh Dive said.
“One of the biggest drivers of global equities is the United States, and some of the macro data coming out from there has been quite positive,” he said. “There is also this view that China is traveling much better than many people had expected.”
The three major Wall Street indices set record highs on Tuesday, with the Dow up 0.3 percent, the S&P 500 adding 0.2 percent and the NASDAQ inching 0.1 percent higher.
In currency markets, the dollar held around a two-week trough as Trump’s escalating war of words with US Senator Bob Corker raised concerns about the administration’s ability to pass promised reforms.
The dollar index steadied at 93.314 against a basket of currencies, around the lowest level since Sept. 29.
The greenback was also under pressure amid ongoing uncertainty over the next US Federal Reserve chairman, with the predictions market site, PredictIt, favoring Fed Governor Jerome Powell as the most likely candidate.
While Powell is regarded as more hawkish than Fed Chair Janet Yellen, whose term expires in February next year, analysts said he might be less aggressive in winding back stimulus than Kevin Warsh, another possible candidate for the role.
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