Most Asian markets rose again Wednesday, tracking a record close on Wall Street, while the dollar held onto its gains against the yen on expectations of a US interest rate rise.
The Dow ended above 19,000 for the first time Tuesday as US traders, while still uncertain about the outlook, bet on a near-term bump for the world’s top economy from Donald Trump’s growth plans.
Investors expect his administration will cut taxes, ramp up infrastructure spending and slash regulations, all of which would likely fan inflation — in turn putting pressure on the Federal Reserve to raise interest rates.
“Bulls have got control here and US equity and many other developed markets are going higher, at least in the short term,” said Chris Weston, chief markets analyst in Melbourne at IG Ltd.
“The Fed has been guiding market participants to believe they always wanted a hike in December, they just needed a little more information before increasing rates, and now they have more than enough information to convince them.”
Sydney closed 1.3 percent higher, Seoul gained 0.2 percent and Singapore added 0.4 percent. Taipei and Wellington were also well up.
However, Shanghai gave up early gains to end 0.2 percent lower, while Hong Kong was marginally off, breaking a three-day winning streak.
Tokyo was closed for a public holiday.
In early European trade London added 0.3 percent, Paris gained 0.2 percent and Frankfurt rose 0.1 percent.
The Fed is due later Wednesday to release minutes of its most recent policy meeting. While they will be pored over for clues about future rate plans, traders are all but certain the Fed will increase borrowing costs in December.
Expectations of higher rates have sent the dollar soaring against the yen this month. On Tuesday it hit a seven-month high of 111.36 yen before easing slightly.
“I would expect the dips to remain shallow as the dollar should remain king of the hill as the market’s appetite for greenbacks remains solid,” said Stephen Innes, senior trader at OANDA.
And Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney, told Bloomberg News that while a hike next month is priced in, the greenback “will continue to be driven by the pace of the Fed’s tightening cycle” afterwards.
On oil markets both main contracts were slightly lower after a flat session Tuesday. Traders are now growing cautious about the outlook for an OPEC-Russia deal to cut output, with Iran and Iraq dragging their feet.
Hong Kong – Hang Seng: DOWN 0.01 percent at 22,676.69 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,241.14 (close)
Tokyo – Nikkei 225: Closed for holiday
London – FTSE 100: UP 0.3 percent at 6,843.56
Euro/dollar: UP at $1.0637 from $1.0627 Tuesday
Dollar/yen: DOWN at 110.98 yen from 111.05 yen
Pound/dollar: DOWN at $1.2414 from $1.2420
Oil – West Texas Intermediate: DOWN 14 cents at $47.89 per barrel
Oil – Brent North Sea: DOWN 15 cents at $48.97
New York – Dow: UP 0.4 percent at 19,023.87 (close)