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Tuesday, October 22nd, 2019

Asia stocks hit near-decade high, yen slips as BOJ cuts inflation forecast

by July 20, 2017 General

SINGAPORE (Reuters) – Asian shares scaled a near-decade peak on Thursday, bolstered by a surge in global stocks to new records on strong U.S. corporate earnings, while the yen eased slightly after the Bank of Japan reinforced expectations it will lag other central banks in dialling back stimulus.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.15 percent, hovering near its highest level since December 2007.

Australian stocks rose 0.6 percent and South Korea’s KOSPI was up 0.1 percent.

Chinese blue chips advanced 0.15 percent, while the Shanghai Composite edged up 0.25 percent. Hong Kong’s Hang Seng crept up 0.3 percent.

The MSCI World index inched up in its 10th straight session of gains on Thursday and set a record high for the sixth consecutive day, lifted by all-time closing highs on Wall Street in the wake of strong earnings reports.

“In the U.S., the earnings season seems to be surprising a little bit on the upside,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

“What we have seen recently in the economic reports suggests it should be even better overseas…So we have come to the point where things look pretty good in the U.S. and it looks even better in prospect overseas, so what’s not to like about equities,” he said.

The yen weakened slightly after the BOJ pushed back its projected timing for hitting its 2 percent inflation target, as it cut price forecasts until fiscal year 2020.

The Japanese currency slipped 0.2 percent to trade at 112.10 yen to the dollar following the BOJ decision. The weaker yen helped lift the Nikkei 0.4 percent.

The euro was steady at $1.15195 on Thursday, ahead of a meeting of the European Central Bank later in the session.

The common currency hit 14-month high this week following seemingly hawkish comments by ECB President Mario Draghi.

At Thursday’s meeting, the ECB may drop a reference to its readiness to increase the size or duration of its asset-purchase programme before announcing in the autumn how and when it will start winding down its bond buying.

“The euro has surged enormously on the back of hopes that the ECB is going to start the process of shutting the door on loose monetary policy,” Naeem Aslam, chief market analyst at ThinkMarkets UK, wrote in a note.

“The ECB needs to be clear about its forward guidance and it should reinforce that in a subtle manner. Coming out of the gates too aggressively would create shock waves in the market.”

The dollar index, which tracks the greenback against a basket of trade-weighted peers, was flat at 94.784.

The Australian dollar set a new two-year high on Thursday, still heady from the minutes of the last Reserve Bank of Australia meeting, released Tuesday, which showed the central bank had turned more upbeat on the economic outlook.

It pulled back from that high to trade down 0.15 percent from Wednesday’s close at $0.7942.

The Canadian dollar was about 0.1 percent weaker at C$1.2615 to the dollar. On Tuesday, it touched a 14-month high on record domestic factory sales and stronger oil prices.

Oil prices, which hit a two-week peak on Wednesday on a bigger-than-expected weekly draw in crude and gasoline inventories in the United States, were marginally lower on Thursday.

U.S. crude fell 0.1 percent to $47.07 a barrel, after jumping 1.6 percent overnight.

Global benchmark Brent also lost 0.1 percent to $49.64, holding on to most of Wednesday’s 1.8 percent gain.

Gold pulled back 0.15 percent to $1,238.55 an ounce on Thursday.

Additional reporting by Lewis Krauskopf; Editing by Sam Holmes and Jacqueline Wong