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Asia stocks advance toward historic highs, U.S. earnings test

Reuters  |  SYDNEY 

By Wayne Cole

SYDNEY (Reuters) - Asian crept toward all-time peaks on Monday after boasted its best start to a year in over a decade, with brisk economic growth and benign proving a potent cocktail for risk appetite.

MSCI's broadest index of outside added 0.1 percent having climbed 3.1 percent last week, its strongest performance in six months.

At 588.07 the index is within spitting distance of the record top of 591.50 hit in November 2007.

The is already at a record, while Australian stocks eked out another decade top. Japan's Nikkei was closed for a holiday but touched its highest since 1992 last week.

"It was the synchronised growth that drove earnings and equity higher last year and the has entered 2018 firing on all cylinders," said analysts at of America Merrill Lynch, predicting the could expand at 4 percent or more this year.

"This growth is keeping our quant models bullish and driving earnings revisions to new highs," they added. "We stay long outside the U. S., with ex-and Nikkei our growth plays, still for yield."

Friday's U. S. jobs report did nothing to challenge that outlook.

While payrolls missed forecasts, the report was perfect for equities given unemployment stayed low but with little sign of the inflationary pressures that would make the Federal Reserve more aggressive in tightening policy.

has already enjoyed its best start to a year in more than a decade, with the Dow up 2.3 percent last week and the 2.6 percent. The tech-heavy Nasdaq led the charge with a rise of 3.4 percent.

The quarterly U.

S. earnings season kicks off this week with the Street expecting solid growth of around 10 percent, though many companies are also likely to be announcing one-off charges to account for recent tax changes.


The next major data hurdles will be U. S. consumer prices and on Friday. In Asia, reports on Wednesday and international trade numbers on Friday.

In currency markets, the dollar had steadied for the moment after a rocky couple of weeks.

With economic activity picking up globally, the dollar has been undermined by expectations the Fed will not be the only tightening policy this year.

On Friday, surprisingly strong Canadian jobs data stoked speculation interest rates there could rise as early as next week and sent the local currency to a three-month peak.

Upbeat euro zone data has likewise underpinned the single currency at $1.2038, though it has so far failed to clear major chart resistance at the September top of $1.2092.

The dollar has fared better on the yen at 113.13, thanks in part to expectations the of will stick with its super-easy policies.

Japanese on Sunday called on governor to keep up efforts to reflate the economy, but added he was undecided on whether to reappoint Kuroda for another five-year term.

The combination of a soft and strong growth has been positive for commodities, with everything from coal to iron ore to copper in demand.

Spot gold made a 3-1/2-month high last week and was trading at $1,320.80 an ounce on Monday.

reached their highest since 2015 helped in part by political tensions in Iran, the third-largest in the Organization of the Petroleum Exporting Countries (OPEC).

Brent was last up 12 cents at $67.74, while U. S. crude rose 17 cents to $61.61 per barrel.

(Editing by Sam Holmes)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 08 2018. 08:13 IST