Stock markets of Asia drop as the Chinese shares trade lower.
Just about everything rose while the dollar languished with markets taking patchy US economic data as a harbinger to stimulus and brinkmanship on Capitol Hill as a sign that a deal on a new US stimulus package is close.
The week’s rally was extended by 0.3% to a six-and-a-half-month high by the MSCI’s broadest index of Asia-Pacific shares outside Japan, following Wall Street’s lead.
The early session saw Japan’s Nikkei index and Hang Seng go down 0.50 and 1.15 per cent respectively. Asian currencies were marching as Australian dollar gained to around 72 US cents. Since March, the Korean won and Malaysian ringgit touched their strongest.
A record high was hit overnight as S&P 500 futures firmed, oil rose and gold inched back.
The Asia-Pacific head of research at ING in Singapore, Rob Carnell, said that if it’s got a pulse, people will buy it now.
He added that the global recover won’t be a ‘V-shaped’ rebound but the focus of the markets is on the fiscal and monetary policymakers despite the next US government package having chances of reducing spending from current levels.
Lawmakers are also being encouraged by Federal Reserve policymakers to provide more aid.
Also, plenty is on its way with a modest selloff in the bond market. This quarter, the US Treasury flagged borrowing $947 billion, almost $270 billion more than what was estimated previously.
On Thursday, the yield on benchmark 10-year US government debt rose 3 basis points and became steady at 0.5445%.
A surprise quarterly profit from Walt Disney Co and some upbeat healthcare results led to company earning which further bolstered the positive sentiment on Wall Street.
A new record peak was minted by Nasdaq. Despite being up by 0.6%, the S&P 500 was less than 2% below its record high hit in February.
Singaporean bank DBS showed a less than expected plunge in profits of the second quarter. This brought some cheers in Asia and helped the shares of Southeast Asia’s biggest lender gain.
The Indian central bank meeting on Thursday is being watched by the investors.
The next read on the pace of hiring will be provided by the US jobs data due at 1230 GMT. Ahead of a Bank of England policy decision, sterling traded cautiously. This policy is due 0600 GMT.
Though no changes are expected, a dovish tilt in language is being looked into by some traders.