Stocks advance on growth optimism, dollar drops

Sydney - Stocks advanced, though volumes were subdued, after US labour market figures lifted optimism on global growth, propelling Wall Street to fresh record highs. The dollar declined.

The Nikkei 225 Stock Average reclaimed a 26-year high as Tokyo shares closed firmer after fluctuating early in the session. Stocks also gained in Hong Kong and China. Volumes were at least 25% below their 30-day average on the Nikkei 225 Stock Average and the Kospi index.

Data showed hiring increased by more than forecast in November and the unemployment rate held at a 17-year low, paving the way for another US interest-rate increase this week. The S&P 500 Index and Dow Jones Industrial Average closed at all-time highs on Friday.

The dollar trimmed some of last week’s gains before the Fed’s meeting at which it’s widely expected to lift rates. Bitcoin futures began trading in Chicago and at one point jumped as much as 25%.

The kiwi dollar climbed as expectations of a dovish approach to monetary policy were scaled back with the appointment of Adrian Orr as the Reserve Bank of New Zealand’s new governor. The Philippine peso advanced after Fitch Ratings upgraded the nation’s long-term foreign-currency rating.

Investor optimism was already bouncing back after the US government averted a shutdown and tax reform negotiations made progress. President Donald Trump prepares to give a closing argument for the proposed tax reform on Wednesday.

With global equities trading near record highs, many money managers earlier this month were booking profits prior to the end of the year amid an equity rotation and waning risk sentiment. While traders see an interest-rate increase by the Fed this week as pretty much a done deal, there remains a furious debate about the pace of hikes next year.

Trading in bitcoin futures started on the Cboe Global Markets, the first major US exchange to offer a product pegged to the cryptocurrency, and triggered two trading halts aimed at cooling volatility. Bitcoin has soared more than 1 500% this year.

Here are some of the key events scheduled for this week:

Fed policy makers on Wednesday are projected to raise the target range for their benchmark interest rate against a backdrop of continuing robust US economic conditions, a vibrant labour market and forecasts for inflation to pick up.

The European Central Bank, the Bank of England and the Swiss National Bank set monetary policy at their respective meetings on Thursday.
Among top US economic reports are consumer inflation on Wednesday and retail sales on Thursday. European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement negotiators meet again.

And these are the main moves in markets:

Stocks

Euro Stoxx 50 futures climbed 0.2% in early European trading. Futures on the S&P 500 rose 0.1 percent. The underlying gauge gained 0.6% on Friday. The Topix index rose 0.5% to the highest in a month at the close in Tokyo and the Nikkei 225 Stock Average gained 0.6% to the strongest since January 1992.

Australia’s S&P/ASX 200 Index added less than 0.1% at the close. South Korea’s Kospi index rose 0.3%.

Hong Kong’s Hang Seng Index gained 1.1% and the Shanghai Composite Index added 1 percent. The ChiNext Index, a gauge of Chinese small-cap shares, was up 1.4%. The MSCI Asia Pacific Index added 0.7%.

Currencies

The Bloomberg Dollar Spot Index fell 0.1%. It ended last week up 1.1%. The yen was little changed at 113.43 per dollar, near the lowest in more than three weeks. The euro traded at $1.1789, up 0.1%. The kiwi jumped 1.1% to 69.25 US cents.

The Philippine peso climbed 0.4% to 50.30 per dollar. Bitcoin rose 7% to $16,736 after earlier touching a new high.

Bonds

The yield on 10-year Treasuries was steady at 2.38%. German 10-year bund yields were little changed at 0.30%.

Commodities

West Texas Intermediate crude fell 0.2% to $57.26 a barrel. Gold was steady at $1.250.69 an ounce.