Asia stocks reach record highs after Wall St surge, dollar edges back

TOKYO (Reuters): Asian stocks struck record highs on Thursday, with a rally by Wall Street supporting bullish investor sentiment, while the dollar pulled back from three-year lows as comments by European Central Bank officials tempered the euro’s recent rally.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2%, building on the previous day’s gains to make a fresh peak.

Australian stocks were flat, South Korea’s KOSPI added 0.2% and Japan’s Nikkei was last up 0.4% after reaching its highest level since late 1991.

Shanghai rose 0.4% and Hong Kong’s Hang Seng advanced 0.4%.

US stocks jumped on Wednesday and the Dow closed above 26,000 for the first time as investors’ expectations for higher earnings lifted stocks across sectors.

Optimism over prospects for sustained strong global growth and improved corporate earnings have helped share markets rally at the start of 2018.

Near-term market focus was on China’s gross domestic product data due at 0700 GMT. Analysts polled by Reuters expect the world’s second-largest economy to have grown 6.7% in the October-December quarter from a year earlier, slowing from a rise of 6.8% in the previous quarter.

The dollar index against a basket of six major currencies was 0.4% higher at 90.878 after pulling back overnight from a three-year low of 90.279 set earlier in the week.

The euro was little changed at $1.2188, slipping from a three-year peak above $1.2300 after some ECB officials voiced worries about the currency’s strength. The common currency had advanced this month on expectations that the central bank would take steps towards winding back on stimulus measures to normalise monetary policy.

The dollar was steady at 111.310 yen after surging 0.75% overnight, when it bounced from a four-month low of 110.190.

The Australian dollar dipped slightly to $0.7959 after being nudged off a four-month high of $0.8023 the previous day. The two-year Treasury yield hovered near a nine-year high of 2.051% reached on Wednesday on expectations the Federal Reserve will continue to tighten monetary policy this year.

Spot gold was down 0.25% at $1,326.50 an ounce, with the dollar’s bounce pulling it back from a four-month high of $1,344.43 set on Monday.