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Asia stocks buoyed as Wall St nears record highs

Wednesday 06:00 GMT

Overview

Bourses across Asia were higher, taking their cue from Wall Street’s return to near record highs and rally in Europe led by Italian banks.

European bourses are expected to open firmer, with spreadbetters predicting the UK’s FTSE 100 will add 30 points to 6,810 and Germany’s Dax to gain 60 points to 10,835. US index futures suggest the S&P 500 will shed 1 point to 2,211, when trading gets under way later in New York.

Hot topic

The big moves were with Australia as gross domestic product data showed the economy shrank for the first time in five and a half years. The 0.5 per cent quarter-on-quarter contraction in the three months to the end of September was the first since the March quarter of 2011 and matched the worst showing since the final three months of 2008.

The negative number was much worse than economists predicted, and the Australian dollar tumbled 0.4 per cent to $0.7428 in response.

The 10-year Australian government bond yield (which moves inversely to price) fell 2.9 basis points to 2.793 per cent as investors began to reconsider whether the central bank, which kept rates on hold on Tuesday at a record low of 1.5 per cent, would be forced to ease monetary policy again in 2017. Shares had a better day, with bank stocks lifting the S&P/ASX 200 0.9 per cent by market close.

What to watch

China’s foreign exchange reserve numbers are due later on Wednesday and may show how much Beijing has been spending to potentially prop up the sliding renminbi. After a bout of strength last week as the US dollar weakened, the Chinese currency has been on the slide this week, although it is still trading close to its weakest levels since mid-2008.

Equities

Japan’s Topix was up 0.7 per cent, with SoftBank Technology spiking 19 per cent after Masayoshi Son, SoftBank Group’s founder, earmarked $50bn worth of investment in the US over the next four years as part of the new tech mega-fund it is raising. Shares in the broader SoftBank Group added as much as 5.1 per cent.

Hong Kong’s Hang Seng was up 0.3 per cent, while on the mainland China’s Shanghai Composite was up by one-quarter of 1 per cent.

Forex

The US dollar index was flat at 100.51 in Asia, after gaining 0.4 per cent overnight to snap a three-day losing streak. Other currencies such as the euro and the Japanese yen were flat, having weakened on Tuesday as the dollar rose. The Australian dollar was the worst performer among Asian and major currencies.

Commodities

Oil prices continued to retreat with Brent crude, the international benchmark, down 0.6 per cent at $53.59 a barrel and West Texas Intermediate down 0.7 per cent at $50.56.

Brent fell 1.8 per cent on Tuesday, its first decline in five sessions, giving back some of last week’s gains notched as Opec members agreed to cut output for six months starting in January.

Gold was down 0.2 per cent at $1,167.41 an ounce.

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