Asian stocks extend global rally

Tokyo - Fresh US equity records ignited Asian markets, with benchmarks from Tokyo to Sydney and Mumbai extending gains as bond yields declined before policy decisions from the world’s two biggest central banks.

The MSCI Asia-Pacific Index of stocks rose the most in almost a month as Japan’s Topix Index closed at its highest this year amid SoftBank’s second day of gains, while bourses in India, Australia, South Korea and Taiwan all gained more than 1%.

The euro and the yen extended gains with gold before Thursday’s European Central Bank meeting, amid mounting speculation policy makers will prolong their asset-buying program. The New Zealand dollar and South Korea’s won strengthened. Yields on Australian bonds fell to their lowest this month. Oil held near $50 a barrel after a surge in US stockpiles.

Expectations ECB chief Mario Draghi will prolong the bank’s €80bn a month of bond purchases beyond March provided a shot in the arm for US equities, which had been struggling to extend the rally ignited by Donald Trump’s unexpected election win a month ago.

Both the S&P 500 Index and the Dow Jones Industrial Average rose to records on Wednesday. Odds on the Federal Reserve hiking interest next week remain at 100%, according to Fed funds futures.

Globally, “we’re seeing a euphoric state continue, and investors will also be heading into the Christmas break soon, so we’re seeing some final moves to get into the market or close off positions,” said  Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank. “We’re also seeing gains from expectations on ECB’s moves to ease.”

As well as the ECB review, Bank of Japan Governor Haruhiko Kuroda will speak at a party for economists. China’s exports gained in November, snapping a seven-month losing streak, while imports jumped the most in two years.

Final third-quarter data showed Japan’s economy expanded less than was projected, growing an annualized 1.3% after economists predicted a rate of 2.3%.

Stocks

The MSCI Asia Pacific Index climbed 1.4% as of 08:18, rising for a third day. Japan’s Topix index gained 1.5%.

SoftBank jumped to levels unseen in two years, and are up 13% this week, as chairperson Masayoshi Son’s meeting with President-elect Donald trump is seen benefiting the company’s businesses, which include Sprint.

Banks and mining companies drove the S&P/ASX 200 up 1.2% in Sydney, to its highest close since August 24.  India’s S&P BSE Sensex rose 1.4%, led by Tata and Infosys, while South Korea’s Kospi added a similar amount.

The Hang Seng Index in Hong Kong climbed 0.5%; gauges in mainland China were little changed. S&P 500 Index futures were up 0.1%.

Telephone and property stocks drove the S&P 500 to its new all-time high on Wednesday, with health-care shares the only decliners among 10 industry groups after President-elect Trump said that he opposed high drug prices.

Currencies

The euro advanced 0.1% at $1.0768 after rising 0.3% last session, while the yen appreciated 0.3% to ¥113.48/$, heading for a second day of gains. The kiwi climbed 0.5%, touching an almost four-week high, as Reserve Bank of New Zealand Governor Graeme Wheeler said he was likely done with rate cuts and the government raised growth projections.

The won added 0.7%, rising for a third day. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, retreated 0.1% and has swung between gains and losses all week.

Bonds

Australian 10-year bonds led the advance in Asia, with yields falling by seven basis points to 2.73%.

Similar maturity New Zealand debt yielded 3.18%, down five basis points. Yields on Treasuries due in a decade held at 2.34% after falling five basis points on Wednesday.

Commodities

West Texas Intermediate crude was little changed to $49.76 a barrel after sliding 2.3% last session. Oil supplies at Cushing, Oklahoma, the biggest US storage hub, climbed by the most since 2009 last week, fueling concern that American shale producers will fill the gap created by the OPEC-led deal to curb output.

Gold for immediate delivery rose 0.3% to $1 178.36 an ounce after gaining 0.4% on Wednesday. Nickel rose 0.4% to $11 450 a metric ton on the London Metal Exchange.

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