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Record Wall Street finish fires up Asia bourses

Thursday 02.10 GMT

Overview

Major bourses across Asia latched on to record closes for key Wall Street indices as US stock markets continued to rally one month on from the presidential election. But investors were also turning their attention to the European Central Bank and whether it will at its policy meeting later on Thursday extend the deadline for its asset stimulus programme.

Hot topic

On Wednesday the S&P 500 rose 1.3 per cent, hitting a record high alongside the Dow Jones Industrial Average and the small-cap Russell 2000. The tech-heavy Nasdaq added 1.1 per cent but remained just shy of its record close set late last month.

The S&P 500 has gained 4.8 per cent in the month since Donald Trump was elected US president, as investors bet that his economic policies will spur inflation and weigh on bond returns. Outpacing the US since the election, though, is Japan, where the Topix has gained 10.2 per cent as a rising US dollar reduced the pressure of a stronger yen.

What to watch

The ECB holds its policy meeting later on Thursday with the market focused on whether the European central bank will extend the March 2017 deadline for the end of its quantitative easing programme.

The euro was 0.1 per cent firmer in Asia at $1.0765. On Monday the single currency touched a 20-month low after Italian prime minister Matteo Renzi conceded defeat in a national referendum on constitutional reform and offered his resignation.

Equities

Japan’s Topix was up 0.8 per cent, with Tepco rising as much as 11.8 per cent on media reports the government will increase by more than half an interest-free loan to help the Fukushima nuclear power plant operator cover rising compensation and decontamination costs.

Australia’s S&P/ASX 200 was up 1.2 per cent, driven by mining stocks as the iron ore price continues to rally. Hong Kong’s Hang Seng gained 0.8 per cent and China’s Shanghai Composite added 0.1 per cent.

Forex

A weak US dollar was buoying currencies around Asia. The US dollar index was down 0.2 per cent at 100.08, after dropping 0.3 per cent on Wednesday. The best performing Asian currencies were South Korea’s won and the Taiwanese and New Zealand dollars, which were each up by more than half of 1 per cent.

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