Asian shares hover near record high, risk currencies in favour

E-Mini S&P futures rose 0.11 per cent to 3,728.5, while MSCI's gauge of Asia-Pacific shares excluding Japan was little changed at 661.76, a hair's breath from its record high of 661.80. — Reuters pic
E-Mini S&P futures rose 0.11 per cent to 3,728.5, while MSCI's gauge of Asia-Pacific shares excluding Japan was little changed at 661.76, a hair's breath from its record high of 661.80. — Reuters pic

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NEW YORK, Dec 31 ― Asian shares are set to end a tumultuous 2020 by hovering near record highs today while riskier currencies cruised near 2-1/2-year peaks, buoyed by hopes that Covid-19 vaccine rollouts will help the world beat the pandemic.

The upbeat mood, reflected in overnight gains on Wall Street, drubbed the “safe-haven” dollar and drove currencies such as the euro, sterling, the Australian dollar and the New Zealand dollar overnight to highs not seen in more than 2-1/2 years.

E-Mini S&P futures rose 0.11 per cent to 3,728.5, while MSCI's gauge of Asia-Pacific shares excluding Japan was little changed at 661.76, a hair's breath from its record high of 661.80.

For the year, the MSCI index is up nearly 20 per cent, outpacing a 15.5 per cent gain in the US S&P 500.

Australian shares lost 0.23 per cent while the Japanese stock market is shut today.

Investors looking forward to a brighter 2021 will be eyeing China's official manufacturing Purchasing Manager's Index for December, due on Thursday at 0100 GMT.

Analysts expect the index to show China's factory sector growing at a solid pace in December as the world's second-largest economy steadily rebounds from the coronavirus crisis.

Still, some analysts warned that this year's heady gains in global stock markets could mean a lot less room for further appreciation in 2021.

“We'd say 80 per cent of all the baseline good news expected in 2021 is already incorporated,” analysts at DataTrek Research said in a note, adding that some “real surprises” would be needed next year for the US stock market to rise another 10 per cent.

For now, however, healthy risk appetites kept investors from the US dollar.

The struggling dollar dropped 0.46 per cent to 89.59 against a basket of currencies, plumbing a low not seen since April 2018.

A listless dollar helped the euro stand firm at a 32-month high of US$1.2298 (RM4.95). Sterling was also steady US$1.3611, a level last seen in May 2018. The Australian dollar and New Zealand dollar also held their ground at their respective 32-month highs of US$0.7665 and US$0.7215.

A battered dollar also supported gold, with bullion prices up a touch at US$1,894.225 an ounce.

Oil prices bucked the trend, however, retreating a shade as swelling year-over-year supply led some traders to view any economic recovery ahead to be gradual rather than swift.

US West Texas Intermediate crude shed 0.02 per cent to trade at US$48.39, far below about US$62 at the start of 2020.

Treasuries were little changed, with benchmark US 10-year yields at 0.9264 per cent and two-year yields at 0.1250 per cent. ― Reuters

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