Asia equities buoyed by Wall St’s record highs

Thursday 06:10 GMT

Overview

Stocks across Asia advanced on Thursday, buoyed by growing expectations that the Federal Reserve would lift interest rates next month and another set of record highs for Wall Street, including the Dow Jones Industrial Average breaking through the 21,000 mark.

European bourses are expected to open slightly lower, with spreadbetters predicting the UK’s FTSE 100 will slip 7 points to 7,376 and Germany’s Dax to drop 2 points to 12,065. US index futures suggest the S&P 500 will shed 4 points to 2,392, when trading gets under way later in New York.

Hot topic

Investors have homed in on recent commentary from Fed policymakers that a 25 basis point rate rise at the US central bank’s March meeting. Most notable was William Dudley, the New York Fed president, who said the case for a rate rise had become “a lot more compelling”.

The Fed looks more likely to raise rates regardless of Donald Trump’s ambitions to cut corporate taxes and invest in infrastructure. The odds for a March rate rise now sit at 80 per cent, according to Fed funds futures tracked by Bloomberg.

Growing confidence in the US economic outlook helped Wall Street reach record highs on Wednesday, including the Dow Jones trading and closing above 21,000 points for the first time.

Equities

Japan’s Topix was up 0.8 per cent, but had been as much as 1.5 per cent higher. Hong Kong’s Hang Seng gained 0.4 per cent, about a quarter of gains earlier in the session.

Australia’s S&P/ASX 200 ended a five-day losing streak with its best gain since late November, as mining stocks helped push the index 1.3 per cent higher. Aluminium stocks gained 10 per cent on reports that China planned to curb output at steel and aluminium producers in an effort to cut winter smog.

China’s Shanghai Composite was fractionally lower, while the technology-focused Shenzhen Composite shed 0.1 per cent.

Forex

The US dollar index was up 0.1 per cent to 101.90, having jumped 0.7 per cent on Wednesday as the chances of a Fed rate rise improved. It was the greenback’s best one-day gain since early January.

That was keeping pressure on global currencies. Japan’s yen was 0.3 per cent weaker at ¥‎114.01 per dollar, eyeing a four-day losing streak that would be its longest since the week of the US election in November.

The euro and the British pound each shed 0.1 per cent.

The Australian dollar was down 0.3 per cent to $0.7655 as data showed the nation’s trade surplus narrowed by more than economists expected during January, somewhat in contrast to more recent data showing the economy to be in overall good health.

Commodities

Oil prices drifted lower on Thursday. In Asia, Brent crude eased 0.5 per cent to $56.12 a barrel, while West Texas Intermediate was down 0.6 per cent at $53.54.

Gold was down 0.2 per cent to $1,246 an ounce.

For market updates and comment follow us on Twitter @FTMarkets