1. Asian shares rally, eye Fed, US data – Reuters
By Chikako Mogi
TOKYO |
Tue Jan 29, 2013 1:26am EST
TOKYO (Reuters) – Asian shares rallied on Tuesday as recent selling drew bargain hunters
ahead of more U.S. economic data and a Federal Reserve policy decision later in the week that
may offer clues to the Fed’s stimulus plans.
European markets were seen following Asia higher, with financial spread-betters predicting
London’s FTSE 100 .FTSE, Paris’s CAC-40 .FCHI and Frankfurt’s DAX .GDAXI would open up
as much as 0.3 percent.
U.S. stock futures were up 0.1 percent, hinting at a firm Wall Street start. .L.EU.N
Solid U.S. earnings and an improving U.S. business spending gauge have combined with a
recent run of positive global economic data, along with signs of easing financial stress in the
euro zone, putting upwards pressure on Treasury yields.
Further signs of brightening U.S. growth prospects would fuel speculation the Fed may consider
pulling back on aggressive easing stimulus. The Fed ends a two-day policy meeting on
Wednesday.
The first estimate of U.S. fourth-quarter gross domestic product also will be released on
Wednesday, followed by non-farm payrolls on Friday.
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2. Few expect any immediate change to the Fed’s very accommodative monetary stance while
other central banks such as the Bank of Japan also embark on fresh easing to help spur
economic activities. India’s central bank cut interest rates on Tuesday for the first time in nine
months.
The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rallied 0.9
percent to snap a four-day losing streak, led by a 1.1 percent jump in Australian shares .AXJO
to a fresh 21-month high on gains in financial shares.
“It seems that a lower interest rate environment is starting to improve confidence among the
Australian business community. Mix this in with the China rebound and we have a sharp rise in
confidence,” said Ben Taylor, sales trader at CMC Markets.
South Korean shares .KS11, which slumped to an 8-week low on Monday, rebounded 0.8
percent.
Japan’s Nikkei stock average .N225 reversed earlier declines and closed up 0.4 percent,
buoyed by optimism over earnings of major banks. .T
“With yields on U.S. Treasury and German government bonds inching higher, one might say
investors may be shifting funds to riskier assets from safe-havens,” said Yuji Saito, director of
foreign exchange at Credit Agricole in Tokyo.
The benchmark U.S. 10-year note yield briefly pierced 2 percent on Monday for the first time
since last April, and inched up 2.5 basis points (bps) in Asia from New York close. The 10-year
Japanese government bond yield also rose.
Naka Matsuzawa, fixed income strategist at Nomura Securities, said in research note that a
sell-off in 5-year Treasury notes over the last two days “would not have occurred unless
expectations of an economic recovery have gained ground to the extent that the monetary
policy outlook begins to change.”
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3. “The market is aware that risks are toward more hawkish FOMC statements in the future rather
than dovish ones,” considering a pick-up in the U.S. economic recovery and stock market rally,
as well as the underlying global risk-on trend, he said.
STUBBORN YEN
Yen selling paused, helping to bolster the benchmark South Korean stock index which is
vulnerable to exchange rate swings as exporters lead market capitalization.
The dollar fell 0.1 percent to 90.78 yen after touching 91.32 on Monday, its highest level since
June 2010, while the euro recouped earlier losses against the yen to steady around 122.10 yen
after hitting 122.91 on Monday, its highest point since April.
The euro was at $1.3450, not far from an 11-month high of $1.3480 hit on Friday.
The euro’s strength sharply contrasted with the crumbling pound, which has been pressured by
worries about the weak UK economy, prospects of more monetary easing by the Bank of
England and the UK’s unclear role within the European Union.
The euro extended its recent stellar run to hit 0.8575 sterling, its highest since late 2011, on
Tuesday. The pound fell to $1.5687, near a five-month low.
“The UK is a small open economy that has benefited from capital inflows because it is not in the
euro area but is in the EU. The former is less helpful now, the uncertainty about the latter is a
clear negative. The result could be to take EUR/GBP close to 0.90 before long-term downtrend
resumes,” said Kit Juckes, FX strategist at Societe Generale in a note.
Commodities were underpinned by a more positive global growth outlook.
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4. “I don’t think there’s much downside risk,” said Tetsu Emori, a commodities fund manager at
Astmax Investments in Tokyo. “I think economic data out of the United States has improved, so
I don’t think there are any negative factors in the market.”
U.S. crude rose 0.4 percent to $96.80 a barrel and Brent inched up 0.1 percent to $113.64.
<O/R>
London copper gained 0.4 percent to $8,078 a tonne.
Gold inched up 0.4 percent to $1,661.95 an ounce but was capped by receding investor
appetite for safe-haven assets. <GOL/>
Asian credit markets lagged the region’s rallying equities, pushing the spread on the iTraxx
Asia ex-Japan investment-grade index wider by 2 basis points.
(Additional reporting by Jessica Jaganathan in Singapore and Thuy Ong in Sydney; Editing by
Eric Meijer & Kim Coghill)
Source Article from
http://www.reuters.com/article/2013/01/29/us-markets-global-idUSBRE88901C20130129
Waddywood.com Asian shares rally, eye Fed, US data – Reuters
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