Asian shares scale seven-month peak

Sydney — Asian shares climbed to a seven-month peak on Wednesday tracking the S&P 500, which scaled record highs driven by ever-expanding policy stimulus aimed at cushioning the blow to economies from the coronavirus pandemic.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, up for a third consecutive day to 570.80 points, a level not seen since late January.

The gains were driven by Australian shares, up 0.8% and South Korea, which added 0.6%. Japan’s Nikkei nudged up too, though Chinese shares started weaker with the blue-chip CSI300 index off 0.7%.

Overnight, both the S&P 500 and Nasdaq Composite set records soon after the opening bell following strong sales growth reported by major US retailers including Walmart, Kohl’s and Home Depot.

The closely watched S&P 500 topped a record peak reached in February just before the onset of the Covid-19 pandemic drove the benchmark index to lows on March 23. The index has surged about 55% since then.

At just 126 days, that “is the fastest bear market recovery ever”, said Tapas Strickland, economist at Melbourne-based National Australia Bank.

Nasdaq clocked its 18th record closing high since early June.

The US Federal Reserve’s intervention in financial markets to maintain liquidity in the midst of the coronavirus pandemic has pushed risk assets to record highs and reduced demand for safe-havens, weakening the greenback.

Market optimism was also buoyed by data showing an acceleration in US homebuilding to the most in nearly four years in July, signifying that the housing sector is emerging as one of the few areas of strength.

In addition, the hope of an interim fiscal package were reignited overnight with House speaker Nancy Pelosi indicating a willingness to cut their proposals to seal a deal, NAB’s Strickland noted. Markets were also paying close attention to minutes from the Fed’s recent meeting due later in the day “for any hints on what the Fed could announce regarding forward guidance come September”, Strickland said.

The Fed has cut rates to near zero to bolster business through the pandemic, sending the dollar to a 27-month low.

The dollar index was last unchanged at 92.23 from above-100 in March. The safe-haven Japanese yen was slightly firmer at ¥107.51 vs the greenback.

The risk-sensitive Australian dollar traded near $0.7255, while the kiwi last bought $0.6611.

Gold flirted with key charted resistance of $2,000/oz to be last at $1,998.

US gold futures were slightly weaker at $2,005.2.

Oil prices skidded as the concern grew that US fuel demand may not recover quickly.

Brent crude down 26c at $45.20 and US crude off 18c at $42.71.

Reuters