Asia markets build on global rally with ECB in focus

09-Dec-2016 Intellasia | AP | 6:00 AM Print This Post

A global stocks rally extended into Asia on Thursday, with investors betting the European Central Bank will prolong its stimulus programme, while the positive mood helped lift riskier currencies.

With the economic outlook in Europe still looking fragile and political uncertainty gripping world markets, analysts expect the ECB will wind up its latest policy meeting with a pledge to continue its cash-pumping measures for another six months.

The speculation has helped refresh a waning global assets rally that began after Donald Trump’s US election win, which traders predict will usher in a time of huge spending, tax cutting and deregulation.

Such positive sentiment has propelled the Dow on Wall Street to successive records – and put it on course to hit 20,000 for the first time – while the S&P 500 also clocked up an all-time high Wednesday.

Hong Kong added 0.5 percent in the afternoon and Tokyo ended 1.5 percent up.

Seoul surged two percent, while Sydney Taipei and Manila piled on more than one percent.

However, Shanghai dipped 0.2 percent despite Chinese trade data showing a forecast-beating jump in imports and exports that indicate the world’s number two economy continues to stabilise.

“The market is optimistic that the ECB will extend its quantitative easing programme at current levels for a further six months,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand, told Bloomberg News.

However, she also said: “There is a real risk of unpleasantness in European bond, equity and currency markets if (ECB head Mario) Draghi doesn’t at least meet expectations.”

– Oil struggles -

Japanese traders brushed off data showing the world’s number three economy grew slower than initially thought, with the government offering a glimmer of hope by revising up its forecasts for the first and second quarter of 2017.

On currency markets the dollar dipped against most of its peers, although expectations the Federal Reserve will ramp up interest rates next week are keeping it buoyant.

The greenback retreated more than one percent against the New Zealand dollar after an upbeat economic reading by the country’s central bank chief, who also said he did not foresee any fresh interest rate cuts.

Most other regional currencies – which have been hammered by the dollar in recent weeks – also performed well. The Australian dollar added 0.5 percent, South Korea’s won gained 0.9 percent and the Indonesian rupiah was 0.3 percent higher.

Oil prices were slightly lower, extending recent losses as investors fret over OPEC’s ability to carry out an output cut agreed last week.

Both main contracts sank Wednesday as a drop in US stockpiles was overshadowed by worries about implementation of the deal with Russia, which sent prices rocketing about 15 percent.

“Market sentiment seems to have reversed as participants question how meaningful the deal is and whether producers will actually stick to proposed cuts,” said Alex Furber, a sales trader with CMC Markets.

– Key figures around 0700 GMT -

Tokyo – Nikkei 225: UP 1.5 percent at 18,765.47 (close)

Hong Kong – Hang Seng: UP 0.5 percent at 22,924.66

Shanghai – Composite: DOWN 0.2 percent at 3,215.37 (close)

euro/dollar: UP at $1.0767 from $1.0755 Wednesday

Dollar/yen: DOWN at 113.50 yen from 113.74 yen

Pound/dollar: UP at $1.2642 from $1.2623

Oil – West Texas Intermediate: DOWN four cents at $49.73 per barrel

Oil – Brent North Sea: DOWN 10 cents at $52.90 per barrel

New York – Dow: UP 1.6 percent at 19,549.62 (close)

London – FTSE 100: UP 1.8 percent at 6,902.23 (close)


Category: FinanceAsia

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