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Asia: Stocks hit near-decade high, markets await BOJ, ECB meetings

Thursday, July 20, 2017 - 12:12

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[SINGAPORE] Asian shares scaled a near-decade peak on Thursday, bolstered by a surge in global stocks to new records on strong US corporate earnings, while investors awaited the Japanese and European central bank meetings for insight into their policy outlooks.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.1 per cent, hovering near its highest level since December 2007.

Japan's Nikkei gained 0.4 per cent. Australian stocks rose 0.6 per cent and South Korea's Kospi was fractionally higher.

Chinese shares were mixed, with blue chips pulling back slightly, while the Shanghai Composite edged higher. Hong Kong's Hang Seng crept up 0.1 per cent.

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The MSCI World index inched up in its 10th straight session of gains on Thursday and set a record high for the sixth consecutive day, lifted by all-time closing highs on Wall Street in the wake of strong earnings reports.

"In the US, the earnings season seems to be surprising a little bit on the upside," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

"What we have seen recently in the economic reports suggests it should be even better overseas... So we have come to the point where things look pretty good in the US and it looks even better in prospect overseas, so what's not to like about equities," he said.

The yen was steady at 111.91 to the US dollar on Thursday.

The Bank of Japan ends its two-day policy meeting on Thursday and is expected to paint a brighter picture of the economy but cut its inflation forecasts again. It is set to keep policy unchanged and reinforce that it will lag well behind major global central banks in scaling back its massive stimulus programme.

The decision is expected between 0330 and 0530 GMT.

The euro was up about 0.1 per cent at US$1.1524 on Thursday, after hitting a 14-month high this week following seemingly hawkish comments by European Central Bank President Mario Draghi.

At Thursday's meeting, the central bank may drop a reference to its readiness to increase the size or duration of its asset-purchase programme before announcing in the autumn how and when it will start winding down its bond buying.

"The euro has surged enormously on the back of hopes that the ECB is going to start the process of shutting the door on loose monetary policy," Naeem Aslam, chief market analyst at ThinkMarkets UK, wrote in a note.

"The ECB needs to be clear about its forward guidance and it should reinforce that in a subtle manner. Coming out of the gates too aggressively would create shock waves in the market."

The US dollar index, which tracks the greenback against a basket of trade-weighted peers, was flat at 94.784.

The Australian dollar set a new two-year high on Thursday, still heady from the minutes of the last Reserve Bank of Australia meeting, released Tuesday, which showed the central bank had turned more upbeat on the economic outlook.

It pulled back from that high to trade little changed from Wednesday's close at US$0.7943.

The Canadian dollar was flat at C$1.2603 to the US dollar. On Tuesday, it touched a 14-month high on record domestic factory sales and stronger oil prices.

Oil prices, which hit a two-week peak on Wednesday on a bigger-than-expected weekly draw in crude and gasoline inventories in the United States, were marginally lower on Thursday.

US crude fell 0.1 per cent to US$47.07 a barrel, after jumping 1.6 per cent overnight.

Global benchmark Brent also lost 0.1 per cent to US$49.64, holding on to most of Wednesday's 1.8 per cent gain.

Gold pulled back 0.1 per cent to US$1,238.50 an ounce on Thursday.

REUTERS

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