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Stocks gain in Asia, Europe on US tax optimism

Apr 21 2017 09:33
Bloomberg: Adam Haigh and Yuko Takeo

Sydney - Global equities climbed as optimism spread for a US tax overhaul, with Tokyo shares rallying on comments from the Bank of Japan (BoJ) chief while gains in Europe were more muted before French elections.

Japan’s Topix capped its best week since early February after BOJ Governor Haruhiko Kuroda said he will keep accommodative policy in place. The S&P 500 Index had its second-best day in a month as US Treasury Secretary Steven Mnuchin said plans to reform taxes have progressed.

The euro and French bonds were steady after a police officer was shot in Paris just days before the nation’s presidential election starts. Oil pared its first weekly loss in a month while iron ore jumped for a third session.

Mnuchin’s comments eased growing concern that President Donald Trump’s fiscal agenda is foundering, while the odds for a rate hike in June climbed toward 60% after Dallas Fed President Robert Kaplan reiterated that three increases this year remain appropriate.

BOJ governor Kuroda said that while Japan’s economy is doing better than thought a few months ago, the inflation rate is still quite sluggish.

“It looks like the Trump administration wants to reignite the market’s expectations for policies,” said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co. in Tokyo. “Kuroda’s comments didn’t diverge from his past stance, but since the yen had strengthened a fair amount, it became a trigger for some profit taking.”

Earnings continued to paint a mixed picture on the health of the economy, while investors kept an eye on a series of elections in Europe. The murder of a policeman on the Champs-Elysees has forced an early end to campaigning for the leading candidates ahead of Sunday’s first round vote in the most uncertain election in recent French history.

Here are some events that investors will be watching:

US Vice President Mike Pence continues his Asia-Pacific trip with a stop in Australia. The first round of voting in the French election is on Sunday, and the two leading candidates will run off in a winner-takes-all contest on May 7.

Currency desks are preparing to start work in Australia before dawn on Monday, with memories still fresh from last year’s Brexit vote and US presidential election.

Here are the main markets moves:

Stocks

The Stoxx Europe 600 rose 0.1% as of 09:12 in London, paring the week’s decline. The MSCI Asia Pacific Index increased 0.7%, the most since March 28. The gauge is up 0.5% for the week, set to break a four-week string of declines. The MSCI Emerging Markets Index advanced 0.5%.

Japan’s Topix index rose 1.1%, capping its first weekly gain in more than a month. Australia’s S&P/ASX 200 Index climbed 0.6%. South Korea’s Kospi index jumped 0.7%.

Hong Kong’s Hang Seng advanced 0.1%. The Shanghai Composite was flat, heading for its worst weekly decline of the year. Futures on the S&P 500 rose 0.1%. The underlying gauge rose 0.8% on Thursday, with American Express surging nearly 6% to pace gains in the financial group after its results topped estimates. 

Currencies

The yen was steady at ¥109.33/$, after dropping 0.4% in each of the past two sessions. The currency is down 0.6% for the week.

The Bloomberg Dollar Spot Index was little changed, poised for a weekly decline of 0.3% after touching the lowest level since the US election in November. The euro rose less than 0.1% to $1.0724. Paris’s Champs Elysees was shut after a police officer was killed and two others injured in a shooting that the government is treating as a terrorist attack.

Bonds

The yield on 10-year Treasuries rose less than one basis point to 2.24%, climbing for a third straight day. Australian benchmark yields gained four basis points to 2.54%. French 10-year yields were little changed at 0.93%.

Commodities

West Texas Intermediate crude oil rose 0.2% to $50.81 a barrel. Oil has tumbled 5.2% this week amid a report showing US gasoline supplies increased for the first time since February, while crude output keeps rising.

Gold fell 0.2% to $1 279.95, poised for its first weekly loss in more than a month. Iron ore futures climbed 4%, rallying for a third straight day. The metal is having a switchback week as investors weigh conflicting signals that burgeoning supply will hurt prices further against signs of strength in China.

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equities  |  markets  |  global markets

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