Asian shares edge up as Wall Street strikes fresh records, yen slips
TOKYO, July 21 (Reuters) – Asian shares edged up on Thursday, bolstered by fresh record highs on Wall Street and a recovery in crude oil prices, while the dollar climbed to a six-week peak against the safe-haven yen.
Crude gained as much as 1 percent on Wednesday, after U.S. inventory data alleviated some fears of supply glut, though gave up some its gains in early Asian trade.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 percent, nudging back toward last week’s nine-month highs, after reassuring earnings overnight helped send both the Dow Jones industrial average and the S&P 500 to record highs.
Tempering risk appetite, however, was Turkish President Tayyip Erdogan who declared a state of emergency on Wednesday as he widened a crackdown against thousands of members of the security forces, judiciary, civil service and academia after a failed military coup.
Japan’s Nikkei stock index jumped 1.2 percent, aided by the tailwind of a weaker currency.
The dollar rose 0.2 percent to 107.14 yen after rising as high as 107.460 earlier, its highest since June 7 and returning to levels seen before markets were roiled by Britain’s vote last month to exit the European Union.
The dollar index, which tracks the greenback against a basket of six rival currencies, hit a peak of 97.323 on Wednesday, its highest level since March 10. It was last at 97.049, down 0.2 percent.
The euro was flat on the day at $1.1018 after notching a near one-month low of $1.0980 overnight.
The European Central Bank will meet later in the session, and is expected to hold policy steady while perhaps addressing a scarcity of bonds for its 1.7 trillion euro stimulus programme.
"The weakness of the euro provides automatic stimulus to the economy, which means the ECB can afford to wait," wrote Kathy Lien, managing director of FX strategy for BK Asset Management.
"So the potential for an initial short squeeze is high if the central bank stands pat and the outlook thereafter will depend on how strong of a message the ECB sends," she said.
Looking ahead, financial heads from the world’s leading economies will meet in China this weekend, with Brexit fallout and dwindling policy options to boost global growth expected to dominate talks.
Sterling rose 0.4 percent to $1.3262, extending overnight gains made after a Bank of England survey showed no clear evidence of slowing economic activity after last month’s Brexit vote and a central bank policymaker said it could potentially wait to cut borrowing costs.
Brazil’s central bank kept interest rates on hold for the eighth consecutive meeting on Wednesday as expected, despite a deep recession, as a new board cited concerns about stubbornly high inflation and uncertainty surrounding economic reforms.
Crude oil gave back some of their overnight gains. Brent crude was slightly lower in Asian trading at $47.16 a barrel, after settling up 1 percent, while U.S. crude was down 0.2 percent at $45.68 after adding 0.7 percent overnight.
Spot gold edged down 0.1 percent to $1,313.27 an ounce after plumbing three-week lows on Wednesday.