Asian shares hit historic highs on Monday after Wall Street extended its record-breaking run, while the US dollar retreat continued as investors priced in the risk of tighter policies elsewhere in the developed world.
Activity was restrained somewhat as a US holiday curbed trade in cash treasuries, though E-Mini futures for the S&P500 still made gains of 0.26%, Reuters reported.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, having finally cleared the former all-time top of 591.50 from late 2007. Australia’s main index firmed 0.1%, while Japan’s Nikkei added 0.3%.
Stocks in Hong Kong jumped 0.9% from Friday’s record closing high. Investors were optimistic that Chinese gross domestic product data for the December quarter due on Thursday would show growth of at least 6.7% for the world’s second biggest economy.
Wall Street was on a roll as the fourth-quarter earnings season kicked off with solid results from banks and robust retail sales, driving investor optimism about economic growth.
The Dow amassed gains of 2% last week, while the Nasdaq gained 1.8% and the S&P 500 1.6%. The S&P 500 and Nasdaq scored eight record closing highs out of the first nine trading days of 2018, while the Dow boasted its sixth closing high of the year.
Earnings for S&P 500 companies are expected to increase on average by 12.1% in the quarter, with profit for financial services companies likely to increase 13.2%, according to Thomson Reuters I/B/E/S.
Dollar in Decline
The dollar index showed no sign of bouncing early on Monday, instead edging down to a fresh trough at 90.622. The euro was up at a three-year peak of $1.224 and holding all of Friday’s 1.3% surge.
The single currency has been bolstered by speculation European Central Bank policymakers are preparing to temper their vast monetary stimulus campaign. Also helping was news German Chancellor Angela Merkel’s CDU party and the Social Democrats were moving toward formal coalition talks.
The dollar slipped to a six-week low on the yen at 110.73 yen, even as the head of the Bank of Japan reiterated his commitment to keeping yields low. The Chinese yuan hit hit a two-year high of 6.415 per dollar in offshore trade.
The pound was at its highest since mid-2016 at $1.374, while the Canadian dollar held firm on wagers the country’s central bank would hike interest rates at a policy meeting on Wednesday.
A softening US dollar combined with resilient Chinese demand has been positive for most commodity prices. Gold hit a four-month top of $1,344.7.
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