A statue of a bull is displayed outside the Shenzhen Stock Exchange in the southern Chinese city of Shenzhen. File Picture: REUTERS/BOBBY YIP
A statue of a bull is displayed outside the Shenzhen Stock Exchange in the southern Chinese city of Shenzhen. File Picture: REUTERS/BOBBY YIP

Tokyo — Asian stocks rose on Wednesday, joining a record-setting session for global markets as investors cheered upbeat factory activity in Europe and solid earnings on Wall Street.

But the dollar dipped, reversing an earlier rise made on hawkish comments from Federal Reserve officials.

Spread-betters expected the boon for equities to extend into the European day, predicting a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, taking its cues from the world stock index rising to a record peak overnight.

South Korea’s Kospi added 0.15%, Singapore advanced 0.7% and Hong Kong’s Hang Seng rose 0.9%. Japan’s Nikkei bucked the trend and shed 0.1%. The Dow rose 0.6% on Tuesday to notch a record closing high for the eighth consecutive session, lifted by strong earnings reports from Wal-Mart and Home Depot.

That followed a strong showing in European equities, which were boosted by upbeat German and French factory activity data, with Germany’s DAX rising to its highest in nearly two years.

The euro, however, has not followed suit as the currency markets focused more on potential political turbulence in the eurozone.

The common currency was up a modest 0.1% at $1.0544 after losing more than 0.7% the previous day.

Polls suggesting improving support for far-right French presidential candidate Marine le Pen have undermined sentiment and weighed on the common currency.

The dollar had risen overnight following hawkish comments from Cleveland and Philadelphia Fed presidents Loretta Mester and Patrick Harker. Mester expressed comfort at raising rates at this point, while Harker reportedly said a March rate increase was on the table.

Financial markets are waiting on the Fed’s January 31 to February 1 policy meeting minutes due later in the day for fresh hints on the central bank’s stance towards interest rates.

The focus would be on the Fed’s economic assessment in the minutes, which should emphasise a recent uptick in economic data, although the market may still remain sceptical about the chances of a near-term rate increase, said Christopher Wong, senior forex strategist for Maybank.

The dollar slipped 0.2% to ¥113.485 after climbing to a five-day high of ¥113.780 overnight.

The greenback’s index against a basket of major currencies was a shade lower at 101.340 after gaining 0.5% the previous day.

Peso boost

A recent big mover in currencies was the Mexican peso, which rallied against the dollar on news that the country’s central bank will offer up to $20bn in currency hedges to tame market volatility. The Mexican currency surged 1.7% against the dollar overnight, breaking the psychological level of 20 against the dollar or the first time since Donald Trump’s November US election victory. Hurt by Trump’s threats to impose trade barriers on Mexico and hit by the prospect of higher US rates, the peso weakened to a record low of about 22 against the dollar in January.

"This is the most important change in the approach to forex policy since the Tequila Crisis," said Marco Oviedo, an economist at Barclays in Mexico City, referring to the economic crisis that pushed Mexico to adopt a free-floating peso in 1994.

The Australian dollar, which has enjoyed steady gains this year on country’s relatively high yields and the rise in the price of iron ore, climbed 0.3% to $0.7695.

In commodities, crude extended gains from the previous day when it touched one-and-a-half-month peaks on oil cartel Opec’s optimism for greater compliance with its deal with other producers including Russia to curb output.

Brent crude rose 0.4% to $56.91 a barrel and US crude added 0.3% to $54.51 a barrel.

Reuters

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