Global stock rally lives on amid earnings optimism

Sydney - Asian stocks extended a global rally after corporate results and hopes of US tax reform boosted optimism for global growth. Weakness in the yen lifted Japanese equities for a fifth day.

The MSCI Asia Pacific Index climbed to the highest level since mid-2015 after strong earnings from the likes of Aluminum of China, Caterpillar and McDonald’s.

Emerging-market stocks also climbed to the highest in almost two years, while Taiwan’s dollar and Malaysia’s ringgit led gains in currencies. The Aussie fell after inflation data missed estimates. The yen extended losses while gold held declines.

“Confidence has returned and the yen has fallen back in value,” said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney. “Markets seem a lot more relaxed. Globally, we’re seeing a lot of risk-on.”

Global equities jumped to an all-time high this month as European political risk abated and the US economy continues to show signs of improvement amid better-than-forecast earnings results.

US President Donald Trump is expected to unveil a tax plan on Wednesday that would cut the upper corporate rate to 15%. 

Risks remain as investors await central bank meetings this week in Japan and Europe. Tensions around North Korea continue to simmer. And in China, concerns of a crackdown from regulators has left the world’s second-largest stock market trading near a four-month low.

Here are some key upcoming events that investors are watching:

Alphabet, Microsoft, Amazon.com, Twitter, Intel, Barclays, Bayer and Total are among major companies releasing results this week. The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday.

Though inflation remains well below the central bank’s 2% target, it’s ticking up. The European Central Bank sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the ECB is starting to discuss an exit from its extraordinary stimulus.

US GDP is due at the end of the week. It’s projected to show the economy expanded at a 1.0% annualised rate in the first quarter, the weakest pace in a year.

Here are the main moves in markets:

Currencies 

The yen slipped 0.3% to 111.45 per dollar as of 08:28, after dropping 1.2% on Tuesday. The currency is down 2.7% from a five-month high reached last week. The euro gained for a fifth straight day, the longest stretch since August, adding 0.1% to $1.0936. Emerging-markets currencies rallied, with the Malaysian ringgit gaining 0.5% and the Indian rupee jumping 0.4%.

The Aussie dropped 0.3% to 75.13 US cents. Australia’s annual core inflation accelerated last quarter to just below the lower end of the central bank’s target, underscoring its decision to leave interest rates unchanged.

The Canadian dollar rose less than 0.1% to 1.35685 per dollar after dropping 0.5% on Tuesday as Trump intensified a trade dispute with Canada, slapping tariffs of up to 24% on imported softwood lumber.

Stocks

Japan’s Topix index rose 1.2%, climbing for a fifth straight day for the longest winning streak this year. Hong Kong’s Hang Seng rose 0.4% and Singapore’s Straits Times Index increased 0.3%. Australia’s S&P/ASX 200 Index added 0.7% and New Zealand’s S&P/NZX 50 Index increased 1.6%, the most since November, as both markets reopened after a holiday on Tuesday.

The Shanghai Composite Index added 0.1% after climbing 0.2% on Tuesday. India’s Sensex climbed 0.6% to a record. Futures on the S&P 500 Index were flat after the underlying gauge climbed 0.6% on Tuesday, to within 10 points of its closing record.

The Dow rose 1.1%, leaving it about 0.5% below its all-time high reached March 1. The Nasdaq Composite added 0.7% to close at an all-time high.  Contracts on the Euro Stoxx 50 Index were little changed. The Stoxx Europe 600 Index gained 0.2% to the highest since August 2015 on Tuesday.

Commodities

Gold was little changed at $1 264.02, after dropping 1% on Tuesday as investors turn attention to Trump’s agenda to boost US growth.

Crude resumed declines, losing 0.2% to $49.45 per barrel, after halting a six-day selloff on Tuesday. Copper added 0.2%, after a 0.9% advance in the previous session.

Bonds

The yield on 10-year Treasuries was little changed at 2.34%, after climbing for five straight sessions. Australian government debt with a similar maturity saw yields rise three basis points to 2.63%.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.15
-0.1%
Rand - Pound
19.95
-0.0%
Rand - Euro
17.19
-0.1%
Rand - Aus dollar
10.97
+0.2%
Rand - Yen
0.13
-0.2%
Gold
1,854.78
+0.6%
Silver
27.59
+0.6%
Palladium
2,897.50
+0.1%
Platinum
1,232.00
+0.2%
Brent Crude
68.71
+2.5%
Top 40
61,046
+0.8%
All Share
67,072
+0.7%
Resource 10
70,080
+1.0%
Industrial 25
84,140
+1.0%
Financial 15
12,615
-0.6%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 1469 votes
No, I did not.
52% - 3650 votes
My landlord refused
27% - 1941 votes
Vote