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Categorized | Currencies

Sentiment in Asia boosted by Wall Street records

Posted on November 22, 2016

Simultaneous record highs for Wall Street’s main equities gauges and higher oil prices have Asian markets in a good mood on Tuesday.

On Monday, the Dow Jones Industrial Average, S&P 500, Nasdaq Composite and small-cap focused Russell 2000 all closed at record highs for the first time since December 31 1999, according to Financial Times analysis of daily Bloomberg data. Energy stocks drove gains thanks to a more than 4 per cent jump in the price of oil, while concerns about US dollar strength were put to the sideline after the greenback closed lower after a near-record winning streak of 10 sessions.

That sentiment coming from the US may have helped investors look past two earthquakes this morning, with a 7.4 magnitude quake that struck off the coast of Fukushima prefecture in Japan and a 5.6 magnitude earthquake off the north island of New Zealand. Shares in Japan are trading relatively close to par, but Tokyo Electric Power Company, owner of the Fukushima Dai-Ichi nuclear power plant, is down 1.4 per cent. The plant was damaged and experienced a meltdown in 2011 following the earthquake and tsunami in March of that year. Local media have reported Tepco as saying it has detected no abnormalities at its nuclear plants.

The yen has strengthened 0.2 per cent to ¥‎110.64 per dollar following this morning’s earthquake, but had traded through the ¥‎111 mark yesterday for the first time since May 31. The New Zealand dollar pared gains after the earthquake there, but had recovered to be 0.2 per cent stronger. Assisting with a recovery in nearly all Asian currencies was a weaker greenback. The dollar index, a measure of the US currency against a basket of peers, is down 0.2 per cent at 100.82.

Japan’s benchmark Topix was up 0.2 per cent, while the price-focused Nikkei 225 was flat. Australia’s S&P/ASX 200 gained 1.2 per cent, driven by energy stocks, while Hong Kong’s Hang Seng gained 1.3 per cent. China’s Shanghai Composite was up 0.2 per cent and the tech-focused Shenzhen Composite rose 0.3 per cent.

Rising expectations Opec members would agree to supply cuts at a meeting scheduled for later this month in Vienna pushed oil prices up by more than 4 per cent on Monday. Prices were up a further 1 per cent in Asia on Tuesday, with Brent crude, the international benchmark at $49.37 a barrel and West Texas Intermediate at $48.70.