Asian equities were mixed as Japanese shares fluctuated, taking some steam out of a global rally after U.S. equities surged to a fresh round of records. Bonds retreated before testimony from the Federal Reserve’s Janet Yellen.

The MSCI Asia Pacific edged higher, with equities in Australia, New Zealand and Taiwan gaining. The S&P 500 Index closed at an unprecedented high on Monday and the MSCI All-Country World Index is trading within a whisker of its May 2015 record close. Treasuries nursed a three-day slide. The Australian dollar jumped after data showed a gain in business confidence. Oil edged higher after Monday’s declines.

Underpinning investors appetite for equities is optimism for an improving U.S. economy under Donald Trump. American consumer inflation expectations hit a 19-month high in January, which should be welcome news for the Federal Reserve as it contends with Trump’s still-unclear economic plans. Speaking of the Fed, Yellen will start testimony in Congress on Tuesday in Washington. Before that, Asian investors will be looking to Chinese data that’s forecast to show an increase in the consumer price index last month.

Traders are pricing in a 30 percent chance the Fed lifts rates at its March 15 meeting, little changed from the probability seen at the start of this year. Bank of Japan governor Haruhiko Kuroda is due to speak Tuesday.

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Here are the main moves in markets on Tuesday:

The MSCI All-Country index added less than 0.1 percent to 441.31 as of 9:55 a.m. in Tokyo, approaching its all-time high of 442.70 reached in May 2015. The measure has advanced for five straight days.

The MSCI Asia Pacific Index climbed 0.1 percent, trading at the highest since July 2015.

Japan’s Topix was little changed after swinging between gains and losses. Australia’s S&P/ASX 200 Index and New Zealand’s S&P/NZX 50 Index each advanced 0.4 percent. South Korea’s Kospi index fell 0.2 percent.

The S&P 500 closed up 0.5 percent at a record 2,328.25 on Monday. The Russell 2000 Index and Nasdaq also rose to all-time highs, as did Apple Inc. shares.

The Bloomberg Dollar Index was little changed after a 0.2 percent gain on Monday and last week’s 0.7 percent advance. The yen added 0.1 percent to 113.65 per dollar, after falling 0.5 percent on Monday.

The Australian dollar strengthened 0.3 percent after the National Australia Bank released data showing business confidence rose in January.

The yield on 10-year Australian bonds advanced four basis points to 2.74 percent, after those on similar-dated Treasury notes added three basis points to 2.44 percent the previous session.

Iron ore gained 1.5 percent, after surging 4.9 percent on Monday. The raw material used to make steel is trading at the highest in more than two years.

Source:
courtesy of BLOOMBERG

by Adam Haigh

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