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Singapore - Asian equities rose to the highest level in almost 10 years as the euro weakened and US dollar remained near its one-year low on hopes the European Central Bank and Bank of Japan will keep policies supportive amid concerns over the pace of reforms in the US.
The MSCI Asia Pacific Index rose for an eighth straight day, adding 0.3% to 158.64 as of 11:32. Financial and technology shares were the top gainers.
“The inability for the Republican party to legislate is putting downward pressure on the USD,” said James Soutter, a fund manager at K2 Asset Management in Melbourne. “Lower USD tends to be positive for Asian-linked currency economies. Until we get any reform or repeal of Obamacare, the US will not put through changes to taxation policy.”
Four out of five top contributors to index move were Australian bank stocks, which rebounded after a two-day slump, after new capital requirements turned out to be less onerous than expected. Chinese shares also rose amid broad based rally led by gains in energy and financial shares.
European Central Bank and Bank of Japan are expected to keep their monetary policies unchanged at their respective meetings on Thursday. The market-implied probability of a Federal Reserve rate hike by year-end has declined to about 40% from 60% on July 7, based on the current effective fed funds rate.
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