Asian shares rally, Aussie dollar hits 8-month high on trade optimism

Shares in Asia rallied and the Australian dollar hit an eight-month high on Thursday as optimism over earnings and trade supported demand for higher yielding assets.

Tokyo's broad Topix gauge of shares hit an all-time high, following new records on Wall Street overnight, after a trade pact between Japan and the US stoked speculation more deals would appear soon to head off sweeping tariffs. Nasdaq and S&P futures rose after results by Google parent Alphabet beat estimates to kick off the "Magnificent Seven" earnings season.

The US has also reached deals with the Philippines and Indonesia and an agreement with the European Union is also expected.

"Worst case concerns about tariffs in the US are probably dissipating to some degree at the moment, but nonetheless, tariffs are going up and that is a hurdle for consumers," Brian Martin, ANZ's head of G3 economics, said in a podcast.

The EU and US are closing in a trade deal that would impose 15 per cent tariffs on European imports, while waiving duties on some items, according to officials from the European Commission. Meanwhile, Treasury Secretary Scott Bessent said US and Chinese officials will meet in Stockholm next week.

Second-quarter earnings season is underway in the US, with 23 per cent of the companies in the S&P 500 having reported. Of those, 85 per cent have beaten Wall Street expectations, according to LSEG data.

Results from Magnificent Seven members, whose results have powered indexes to previous peaks, are in the spotlight for guidance on spending and returns surrounding artificial intelligence (AI).

Alphabet strongly beat estimates and cited massive demand for its cloud computing services as it hiked its capital spending plans. But electric car maker Tesla posted its worst quarterly sales decline in more than a decade and profit that trailed analyst targets.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 per cent. Japan's Topix surged for a second day, rising 1.4 per cent to surpass its previous all-time high reached last year.

The Australian dollar, a common proxy for risk sentiment, fetched $0.66, just off $0.6604 hit earlier, which was the highest since November 2024. The US dollar dropped 0.1 per cent to 146.38 yen.

US crude climbed 0.4 per cent to $65.5 a barrel. Spot gold was traded at $3,390.84 per ounce, up 0.1 per cent.

In early trades, pan-region Euro Stoxx 50 futures shot up 1.3 per cent at 5,435, while German DAX futures were up 1.3 per cent.

US stock futures, the S&P 500 e-minis, were up 0.13 per cent and Nasdaq contracts climbed 0.4 per cent.