TOKYO, July 25 — Asian stocks were higher today, supported by strong Wall Street earnings and hopes China’s government spending would boost growth but trade tensions remain in focus ahead of a meeting between the US and European Commission presidents.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.2 per cent.
The index extended the previous day’s gains made after China said it will adopt a more vigorous fiscal policy to cushion the impact of external uncertainties.
The Shanghai Composite Index was little changed after brushing a one-month high. It has advanced roughly 3 per cent so far this week. Hong Kong’s Hang Seng climbed 0.6 per cent.
South Korea’s KOSPI lost 0.15 per cent and Japan’s Nikkei rose 0.5 per cent.
Overnight on Wall Street, the S&P 500 closed at its highest level since February 1 as Alphabet’s blowout results bolstered expectations of a robust earnings season.
“Gains by US shares are providing support for equities, as well as China’s stimulus plan. Corporate earnings will continue to come out and these will be a key focal point for the markets, which also have to keep an eye on trade developments,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.
On the trade front, focus was on talks between US President Donald Trump and European Commission President Jean-Claude Juncker set later today, at which trade issues are likely to dominate.
In foreign exchange markets, the dollar index against a basket of six major currencies was little changed at 94.568, having edged up from a near two-week low of 94.207.
The 10-year Treasury note yield stood at 2.943 per cent after climbing to a six-week peak of 2.973 per cent overnight.
The yield shot up this week on speculation the Bank of Japan was edging closer to unwinding its aggressive monetary stimulus, following reports late last week that the central bank was holding preliminary discussions on possible changes to its monetary policy.
The euro edged up 0.05 per cent to US$1.1688 (RM4.75) while the dollar added 0.05 per cent to 111.26 yen.
The pound was up 0.05 per cent at US$1.3151, building on gains from the previous day on news that British Prime Minister Theresa May would lead negotiations on the country’s departure from the European Union.
The decline in China’s yuan’s appears to have paused for the time being, with the currency a shade firmer at 6.797 per dollar . It pulled back from a 13-month low of 6.829 set the previous day on expectations that monetary conditions would be allowed to loosen further.
The Australian dollar dipped 0.1 per cent to US$0.7411 after gaining 0.5 per cent yesterday when hopes for China’s stimulus lifted the currency.
The Turkish lira was on the defensive after the country’s central bank yesterday unexpectedly left interest rates on hold.
The central bank’s decision was in focus amid investors’ concern over its perceived lack of independence from Turkish President Tayyip Erdogan. The president is seen wanting lower borrowing costs to fuel economic growth, although the central bank is tasked with combating inflationary pressure.
The South African rand, on the other hand, stood tall after surging more than 1 per cent yesterday on news that China would invest US$14.7 billion in the local economy.
Copper on the London Metal Exchange (LME) traded at US$6,270.50 per tonne after soaring 2.7 per cent overnight to a two-week peak of US$6,328.00.
Iron ore on the Dalian Commodity Exchange touched a two-month peak of 479.5 yuan a tonne.
Brent crude futures were up 0.67 per cent at US$73.92 a barrel, adding to the previous day’s gains as market focus shifted away from oversupply concerns to the possibility of increasing Chinese demand. — Reuters
