World Economy

Asia Stocks Surge, Europe Edges Up

Asia Stocks Surge, Europe Edges UpAsia Stocks Surge, Europe Edges Up

Asian stocks rose briskly on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in US interest rates, while the dollar held to large gains made as treasury yields picked up.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2%. Shanghai stocks edged up 0.8% and Australian shares rallied 2.2%. Crude oil prices bouncing from multi-year lows buoyed energy-related shares, Reuters reported.

Japan’s Nikkei surged 2.5%, rebounding from a two-month low struck the previous day as risk sentiment has blown hot and cold ahead of one of the most-anticipated market events this year.

The broader Topix climbed 2.5% to 1,540.72 with all but one of its 33 sub-indexes in positive territory. The JPX-Nikkei Index 400 rose 2.7% to 13,879.68.

On Wall Street Tuesday, the Dow added 0.9% and the S&P 500 advanced 1.1%. Bank stocks, which will likely benefit from higher rates, were among the market leaders.

The dollar index last stood at 98.12, having gained 0.6%. The dollar gained 0.2% to 121.83 yen, pulling further away from a six-week trough of 120.35 struck Monday. The euro traded near $1.09 after recoiling from a seven-week peak of $1.10.

Supporting the greenback, treasury yields rose overnight as gains on Wall Street reduced the appeal of safe-haven bonds and stable US consumer price data reinforced the case for a Fed rate hike.

In commodities, crude oil dipped after gaining for two successive days. US crude was down 0.7% at $37.08 a barrel. Concerns of global oversupply had sent crude to a seven-year low of $34.53 earlier this week.

Three-month copper on the London Metal Exchange bounced 0.5% to $4,590 a ton on short covering. It still traded within distance of a one-week low of $4,554 struck overnight on the dollar’s surge and concerns of a Fed hike.

A strong dollar makes dollar-priced metals more costly for non-US investors.

Spreadbetters saw the upbeat momentum in equities being retained in Europe and forecast a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC.

European shares edged higher on Wednesday, mirroring gains on Wall Street and in Asia, with investors awaiting the outcome of a crucial rate-setting meeting of the US Federal Reserve for hints about the market’s near-term direction.

The pan-European FTSEurofirst index was up 0.18% at 1,413.49 points by 0806 GMT, after climbing 2.9% in the previous session following a rebound in crude oil prices.

The Fed is widely expected to announce a rate hike after the end of its two-day policy meeting on Dec. 16 and17. It would be the first US rate hike in nearly a decade, signaling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally.