Asian stocks rose briskly on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in US interest rates, while the dollar held to large gains made as treasury yields picked up.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2%. Shanghai stocks edged up 0.8% and Australian shares rallied 2.2%. Crude oil prices bouncing from multi-year lows buoyed energy-related shares, Reuters reported.
Japan’s Nikkei surged 2.5%, rebounding from a two-month low struck the previous day as risk sentiment has blown hot and cold ahead of one of the most-anticipated market events this year.
The broader Topix climbed 2.5% to 1,540.72 with all but one of its 33 sub-indexes in positive territory. The JPX-Nikkei Index 400 rose 2.7% to 13,879.68.
On Wall Street Tuesday, the Dow added 0.9% and the S&P 500 advanced 1.1%. Bank stocks, which will likely benefit from higher rates, were among the market leaders.
The dollar index last stood at 98.12, having gained 0.6%. The dollar gained 0.2% to 121.83 yen, pulling further away from a six-week trough of 120.35 struck Monday. The euro traded near $1.09 after recoiling from a seven-week peak of $1.10.
Supporting the greenback, treasury yields rose overnight as gains on Wall Street reduced the appeal of safe-haven bonds and stable US consumer price data reinforced the case for a Fed rate hike.
In commodities, crude oil dipped after gaining for two successive days. US crude was down 0.7% at $37.08 a barrel. Concerns of global oversupply had sent crude to a seven-year low of $34.53 earlier this week.
Three-month copper on the London Metal Exchange bounced 0.5% to $4,590 a ton on short covering. It still traded within distance of a one-week low of $4,554 struck overnight on the dollar’s surge and concerns of a Fed hike.
A strong dollar makes dollar-priced metals more costly for non-US investors.
Spreadbetters saw the upbeat momentum in equities being retained in Europe and forecast a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC.
European shares edged higher on Wednesday, mirroring gains on Wall Street and in Asia, with investors awaiting the outcome of a crucial rate-setting meeting of the US Federal Reserve for hints about the market’s near-term direction.
The pan-European FTSEurofirst index was up 0.18% at 1,413.49 points by 0806 GMT, after climbing 2.9% in the previous session following a rebound in crude oil prices.
The Fed is widely expected to announce a rate hike after the end of its two-day policy meeting on Dec. 16 and17. It would be the first US rate hike in nearly a decade, signaling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally.
