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Thursday, 23 October 2014 00:00 - - {{hitsCtrl.values.hits}}
Various Euro notes are pictured on a table
in Warsaw, 24 February
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1% to a nearly two-week high, while Japan’s Nikkei stock average ended 2.6% higher, clawing back ground lost in Tuesday’s 2% drop.
Sentiment also got a lift from a Reuters report that the ECB is considering buying corporate bonds, a step that would help banks free up more of their balance sheets for lending. The ECB might decide on the matter as soon as December with a view to begin purchases early next year, several sources familiar with the situation said.
“The news triggered bargain-hunting as Japanese shares have fallen to levels which priced in the worst-case scenario,” said Toru Ibayashi, Executive Director at UBS Wealth Management, referring to fears that Europe’s economy would fall back into recession.
In US trading, shares of Apple Inc and Texas Instruments Inc gained on stronger-than-expected quarterly earnings, lifting the tech-heavy Nasdaq Composite index more than 2%. The S&P 500 added 1.96% to mark its biggest daily percentage gain since October 2013 and its fourth straight rising session.
Japanese trade data released early Wednesday also underpinned buying in Tokyo. Exports rose 6.9% in September from a year earlier, the fastest pace in seven months, in a tentative sign that external demand is starting to pick up.
The upbeat mood in global equities markets sapped the safe-haven appeal of US Treasuries, pushing their yields away from last week’s 17-month lows. The yield on benchmark 10-year US Treasury notes stood at 2.211% in late Asian trade, up from Tuesday’s US close of 2.208%.
Higher U.S. yields supported bolster the greenback, with the dollar index steady on the day at 85.301.
Data on Tuesday showing a stronger-than-expected 2.4% rise in U.S. domestic home resales last month provided evidence that the US economic recovery maintained momentum and also put upward pressure on yields.
“Given heightened concern about falling inflation expectations, the attention turns to the US September CPI report,” strategists at Barclays said. “Our thesis of USD outperformance driven by relative US strength and interest rate divergence remains intact, but is at risk of delay pending soft underlying inflation trends.”
The CPI report is due at 1230 GMT. Economists expect annual core CPI inflation to stay flat at 1.7% in September, and a cooler reading would add to speculation that the Federal Reserve will wait longer before raising interest rates.
The consensus view is that the US central bank will decide to wrap up its asset purchases under its third round of quantitative easing later this month at its Oct 28-29 policy meeting, though short-term interest rates futures implied markets do not expect the Fed to hike rates until late 2015.
The dollar inched lower on the day against the yen to 106.91 yen, while the euro nursed its losses after dropping on the ECB news, and edged slightly higher to $1.2727.
In commodities markets, Brent crude added about 0.1% to $86.31 a barrel after posting solid gains on Tuesday, helped by data showing stronger-than-expected China demand and some technical price recovery after weeks of almost uninterrupted selling.
Spot gold was slightly lower on the day at $1,247.80 an ounce, but still not far from a six-week high marked in the previous session.
