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Sydney - The dollar weakened to the lowest since November while stocks jumped, led by a rally in Chinese financial stocks. Oil extended gains ahead of a key meeting from crude producing countries.
The US currency fell as minutes from the Federal Reserve’s latest policy meeting showed heightened debate over the prospect of rate increases beyond June. Crude resumed a rally as Russia’s energy minister said a nine-month extension to supply cuts could include an option for an extra three months.
The Shanghai Composite Index jumped the most since April amid speculation that state-backed funds were active in the market. South Korean stocks extended a record and the won climbed after the central bank kept rates on hold.
“There’s a fear of missing out on this rally and that’s still a huge driver,” said Karl Goody, private-wealth manager in Sydney at Shaw and Partners. “The US economy looks reasonable but there are still issues coming out of China. You need to be cautious but still remain a little bit optimistic. There’s no strong reasons to sell.”
Stock markets in the US have recovered from worries surrounding the prospects for President Donald Trump’s reform policies which triggered the biggest slide on the S&P 500 in eight months last week.
The Fed minutes confirmed the likelihood of a June rate increase, while casting some doubts over the trajectory for rates thereafter. Policy makers signaled they wanted more evidence that recent weakness in economic growth is transitory before removing monetary stimulus further.
Investors will be turning their attention to Vienna as ministers from OPEC and other major producing nations meet to cement an extension of their output cut agreement. The decision comes after last year’s pact failed to clear a global supply glut or deliver a sustainable price recovery.
In China, stocks are rallying a day after Moody’s Investors Service reduced its rating on the country amid concerns over rising debt and slowing economic growth. Investors are also looking past comments by Carson Block, the founder of Muddy Waters LLC, who said China’s credit problems since the global financial crisis will reach a breaking point.
Here are key upcoming events:
OPEC meets in Vienna. The price of oil has climbed going into the discussions on expectations supply cuts will be cemented and extended. South Africa releases its monetary policy decision later on Thursday, while data on UK GDP is also due.
Here are the main moves in markets:
Commodities
Crude rose 0.9% to $51.83 a barrel as of 08:22 in Tokyo, after touching the highest level in more than a month. Gold was little changed at $1 258.70 an ounce.
Stocks
The MSCI Asia Pacific Index jumped 0.9% to the highest level since May 2015. Japan’s Topix index rose 0.2%, while Taiwan’s Taiex extended gains to the highest since 2000. South Korea’s Kospi index climbed 1.1% to an all-time high. The Bank of Korea, in its first decision since the nation elected a new president, left its key interest rate unchanged as household debt continues to rise and the economy shows signs of improvement.
Futures on the S&P 500 rose 0.4%. The underlying gauge rose 0.3% on Wednesday. Contracts on the Euro Stoxx 50 climbed 0.7%.
The Hang Seng China Enterprises Index soared 1.7%, climbing above 10 500 for the first time since March 29. The Shanghai Composite jumped 1.3%, the most since April 5, while the Hang Seng Index rose 0.8% to the highest in almost two years.
Currencies
The Bloomberg Dollar Spot Index dropped 0.2% to the lowest since November 9, after falling 0.3% on Wednesday. The yen fell 0.2% to 111.71 per dollar after the Japanese currency climbed 0.3% on Wednesday. The South Korean won rallied 0.9%, while China’s offshore yuan climbed 0.3%.
The kiwi was little changed after swinging between gains and losses. New Zealand’s government has pledged to loosen the purse strings if re-elected later this year, announcing a big boost to family incomes in its annual budget. The euro gained 0.1% to $1.1233. The British pound also rose 0.1%.
Bonds
The yield on 10-year Treasury notes was steady after losing three basis points to 2.25% on Wednesday. Australian benchmark yields dropped four basis points to 2.44%.
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