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Asia: Most markets rally as euro lifted by Catalan relief

[HONG KONG] Asian markets mostly rose again on Thursday, boosted by another record performance on Wall Street with confidence high heading into the earnings season.

The euro also managed to hold its gains against the greenback as hopes for a resolution to the Catalan crisis in Spain trump expectations the Federal Reserve will hike interest rates for a third time this year in December.

While US-North Korea tensions rumble on in the background, trading floors remain positive following a series of upbeat readings across global economies that have helped equities hit multi-year highs.

In New York all three main indexes chalked up yet more records following strong corporate reports, while analysts said the mood was also improved by the small number of firms warning they expected a negative impact from hurricanes Harvey, Irma and Maria.

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The gains in New York provided a solid platform for Asian traders.

By the end of morning trade Tokyo's Nikkei was up 0.5 per cent, having clocked its highest level in 21 years on Wednesday, while Sydney added 0.1 per cent and Singapore was up 0.6 per cent.

Seoul gained 0.2 per cent, with Wellington, Taipei, Manila and Jakarta also well up.

Hong Kong and Shanghai were both flat.

'NOT IF BUT WHEN'

Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, said the recent passage of a US budget bill had left him confident that Donald Trump would be able to push through key tax and spending plans, which would give a further lift to markets.

"The question is not if, but when," he said in a note. "I believe that the tax reforms and planned infrastructure spend are going to be the biggest catalysts for inflation and jobs growth in the US."

On foreign exchanges the euro edged up further after Catalan leader Carles Puigdemont adopted a more conciliatory tone in a speech on independence. The unit was at US$1.1868 Thursday, well up from the low US$1.17 mark seen last week, though well off the US$1.2033 enjoyed in September.

Later Spanish Prime Minister Mariano Rajoy gave him until next week to clarify whether he intends to push ahead with a breakaway, warning Madrid would suspend the region's autonomy.

"The market appears to have welcomed the decision... to give Carles Puigdemont, the president of the government of Catalonia, five days to clarify whether he has declared independence from Spain or not," Rodrigo Catril, FX Strategist at National Australia Bank, said in a commentary.

However, Stephen Innes, head of Asia-Pacific trading at Oanda, warned that he still saw the single currency's gains "as more of a relief rally as EU risk has tentatively settled".

The dollar was also slightly down against its main peers following the release of minutes from the Fed's most recent board meeting, which suggested policymakers edging towards another rate hike but some expressing concern at still weak inflation.

AFP