Asian stocks climbed to a record, buoyed by fresh all-time highs for U.S. equities with investors energized by the outlook for profits and tax reform.

The MSCI Asia Pacific Index broke through its 2007 peak as trading got underway in the region on Wednesday, with shares higher in Tokyo, Sydney and Seoul. All major American benchmark equity indexes reached all-time highs on Tuesday and Goldman Sachs Group Inc. lifted its forecast for U.S. stock gains in 2018, saying strong economic growth and tax reform will improve corporate earnings. The dollar maintained losses as the Treasury yield curve flattened further amid a global sovereign-bond rally. The Mexican peso climbed after a report of progress in negotiations over the North American Free Trade Agreement.

While the Thanksgiving holiday gives traders an excuse to pause, global stocks are adding to what’s been a stellar year for equity returns amid optimism about global growth and company earnings. The bond market has been showing fixed-income traders are more concerned that the U.S. economy may slow with the gap between the yield on longer dated Treasuries and shorter-term bonds narrowing to levels not seen for 10 years.

“The earnings picture is dominant and that’s of course what has, and will continue, to move markets,” Bob Doll, chief equity strategist at Nuveen Asset Management, told Bloomberg TV. “Icing on the cake is the tax bill and that does boost earnings but a lot of people are already baking that into their assumption.”

The Australian dollar rose back toward 76 U.S. cents as traders latched onto comments by Reserve Bank of Australia Governor Philip Lowe who suggested the next move in interest rates will be up, even though there is no case for borrowing costs to change in the near term. Third-quarter construction jumped 15.7 percent from the previous quarter, beating estimates of a 2.3 percent drop.

Terminal users can read more in our Markets Live blog.

Here are some key events coming up this week:

Minutes from the European Central Bank’s October meeting due on Thursday could show dissent in the discussion about tapering.

In Asia, Singapore 3Q GDP is due on Thursday. New Zealand October trade and South Korea November consumer confidence are due later in the week.

Reports on sales of previously owned homes and durable goods orders for October are due in the U.S.

The minutes from the Fed’s latest policy meeting are out on Wednesday.

The U.K. announces its budget Wednesday.

These are the main moves in markets:

Stocks

Japan’s Topix index was up 0.5 percent as of 9:30 a.m. in Tokyo. The Nikkei 225 Stock Average climbed 0.8 percent.

Australia’s S&P/ASX 200 Index rose 0.2 percent.

South Korea’s Kospi index added 0.8 percent.

Contracts on Hong Kong’s Hang Seng Index gained 0.8 percent.

S&P 500 Index contracts were little changed. The underlying measure climbed 0.7 percent.

The MSCI Asia Pacific Index advanced 0.5 percent. The MSCI Emerging Market Index extended a rally that took it to the highest in more than six years.

Currencies

The Bloomberg Dollar Spot Index was little changed.

The yen was at 112.26 per dollar, up 0.2 percent.

The Aussie dollar rose 0.2 percent to 75.93 U.S. cents.

The euro was steady at $1.1745.

The pound was little changed at $1.3248.

The Mexican peso was at 18.8139 per dollar after jumping 1.2 percent to hit a five-week high. Juan Pablo Castanon, head of Mexico’s business chamber, said in an interview that negotiators were close to finishing work on telecom, energy and digital commerce provisions of Nafta.

Bonds

The yield on 10-year Treasuries was steady at 2.35 percent.

Australia’s 10-year yield fell about one basis point to 2.54 percent.

Commodities

West Texas Intermediate crude was back above $57 a barrel, adding 0.4 percent to $57.07. An industry report was said to show inventories of U.S. crude declined for the first time in three weeks.

Gold was steady at $1,281.93 an ounce.

Source:
courtesy of BLOOMBERG

by Adam Haigh

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