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

TOKYO - 18 January 2018: 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.

Spreadbetters expect Britain's FTSE .FTSE to open 0.1 percent lower, Germany's DAX .GDAXI to start 0.3 percent higher and France's CAC .FCHI opening up 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was 0.2 percent higher after rising as much as 0.4 percent to a fresh record peak.

South Korea's KOSPI .KS11 was effectively flat. Japan's Nikkei .N225 reached its highest level since late 1991 earlier before ending down 0.4 percent.

Shanghai shares .SSEC rose 0.9 percent, buoyed by data showing China's economy grew 6.8 percent in the October-December quarter from a year earlier, the same rate as the previous quarter and slightly better than most economists had expected.

U.S. stocks jumped on Wednesday and the Dow .DJI closed above 26,000 for the first time as investors' expectations for higher earnings lifted stocks across sectors. [.N]

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

“Events related to North Korea pose potential risks, but there are very few factors holding equities back at the moment,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“And bullish U.S. stocks, higher Treasury yields and signs of the euro’s recent surge running its course are all dollar-supportive factors,” Ishikawa said.

The dollar index against a basket of six major currencies .DXY was 0.3 percent higher at 90.793 after pulling back overnight from a three-year low of 90.279 set earlier in the week.

The euro was traded at $1.2203 EUR=, 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 normalize monetary policy.

The dollar was flat at 111.270 yen JPY= after surging 0.75 percent overnight, when it bounced from a four-month low of 110.190.

The two-year Treasury yield US2YT=RR hovered near a nine-year high of 2.051 percent reached on Wednesday on expectations the Federal Reserve will continue to tighten monetary policy this year.

In commodities, crude oil prices rose earlier on data showing a decline in U.S. crude inventories and as rebels in Nigeria threatened to attack the country’s petroleum infrastructure, before trimming their gains. [O/R]

U.S. crude futures LCOc1 were 2 cents higher at $63.99 a barrel. On Tuesday, they hit a three-year high of $64.89.

Many analysts warned that the recent oil price rally could lose momentum.

“We reckon that the upside is now limited for oil prices. U.S. shale oil output will increase by a good 111,000 barrels per day (bpd) next month to 10 million bpd, and will rise to about 11 million bpd by the end of next year,” said Fawad Razaqzada, market analyst at Forex.com.

“This would put the U.S. on par with Saudi Arabia and Russia’s output,” Razaqzada said.

Spot gold XAU= was down 0.1 percent at $1,327.56 an ounce, with the dollar’s bounce pulling it back from a four-month high of $1,344.43 set on Monday. [GOL/]