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Global Markets: Asia buoyed by post-election Wall Street rally, dollar bounces

Reuters  |  TOKYO 

By Shinichi Saoshiro

(Reuters) - Asian stocks scaled a one-month peak on Thursday, after investors drove a Wall Street rally on relief the U.S. midterm elections delivered no major political surprises, while the dollar bounced and pulled away from 2-1/2-week lows.

Spreadbetters expected European stocks to follow higher at the open, with Britain's FTSE seen adding 0.36 percent, Germany's DAX rising 0.55 percent and France's CAC climbing 0.45 percent.

MSCI's broadest index of shares outside was last up 0.8 percent to stand at its highest since Oct. 8.

Hong Kong's Hang Seng advanced 0.9 percent and the Shanghai Composite Index climbed 0.2 percent, receiving a mild lift from China's stronger-than-expected October exports data.

Australian stocks rose 0.5 percent, South Korea's added 1.3 percent and Japan's Nikkei gained 1.8 percent.

Wall Street's main indexes rose more than 2 percent on Wednesday, led by the technology and as the market breathed a sigh of relief after the U.S. midterm elections, in which Democrats wrested control of the and Republicans retained the

"Going forward, we think the removal of uncertainty and realization of the expected outcome should be supportive for risk assets," analysts said in a report.

While a divided will make it harder for to push through new legislation, such as additional tax cuts, investors do not expect a reversal of recently enacted tax cuts and deregulation.

"The key point after the midterm elections is that U.S. stocks showed they had developed immunity towards higher yields. The last time long-term Treasury yields were at this level a month ago, they had helped trigger a major fall by stocks," said Junichi Ishikawa, at in

"Steady U.S. fundamentals will support this trend of equities and yields rising in tandem, which should also prop up the dollar in the longer term."

The 10-year Treasury note yield rose to 3.25 percent on Wednesday, its highest since Oct. 9, with Wall Street's rally reducing demand for safe-haven debt. It last stood at 3.23 percent.

The dollar index against a basket of six major currencies gained 0.2 percent to 96.177, pulling back from 95.678 plumbed on Wednesday, its lowest since Oct. 22.

That low for the greenback was driven by a knee-jerk reaction to the U.S. midterm election results, with a divided seen dulling Trump's fiscal stimulus drive.

Some focus was also on the Federal Reserve's monetary policy due later on Thursday. The Fed, however, is not expected to hike interest rates until its next gathering in December and analysts expected this meeting to have limited market impact.

The central has tightened monetary policy three times in 2018, with the latest rate hike coming in September.

"A split is unlikely to materially alter the Fed's near-term hiking trajectory and the Fed will be biased to keep raising rates until the data or financial conditions turn," strategists at of America Merrill Lynch wrote.

The euro was up 0.05 percent at $1.1432 after pulling back sharply from a high of $1.1500 brushed earlier on Wednesday.

The dollar was a shade higher at 113.62 yen and in striking distance of a one-month peak of 113.82 reached the previous day.

In commodities, U.S. crude futures inched up 0.1 percent to $61.73 a barrel after falling to an eight-month trough of $61.20 on Wednesday.

Brent crude dipped 0.08 percent to $72.01 a barrel following a loss of 1.4 percent the previous day.

struggled after surging U.S. crude output hit another record and domestic inventories rose more than expected.

(Editing by & Shri Navaratnam)

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

First Published: Thu, November 08 2018. 11:52 IST
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