SINGAPORE/NEW YORK- Asian stocks perched near record heights, the dollar languished at two-year lows and oil prices stood at their strongest since March on Thursday, as monetary support and the hope of fiscal stimulus in the United States put traders in a festive mood.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent to touch an all-time high. Japan’s Nikkei rose 0.2 percent, though both fell back to flat while investors waited for US lawmakers to agree on stimulus.
The risk-sensitive Australian and New Zealand dollars climbed to multi-year tops with the euro not far behind, and US stock futures extended gains from Wednesday.
Brent crude oil futures, a proxy for global energy consumption and growth, rose 0.7 percent to $51.45 a barrel, the highest level since early March – before over-production fears and virus worries pushed oil prices off a cliff.
“My suspicion is markets are inclined to extend this rally for two reasons,” said Vishnu Varathan, head economist at Mizuho in Singapore, citing US monetary policy support and the good news on the horizon as vaccines roll out globally.
“If new infection numbers don’t go crazy…I think there is some scope for a so-called Santa rally into the end of the year,” he said. “That’s what markets appear to be poised for.”
US Federal Reserve Chairman Jerome Powell vowed on Wednesday to keep pouring cash in to markets until the US economic recovery is secure.
Bond traders were disappointed he didn’t extend the Fed’s purchase program deeper down the yield curve, and US Treasuries sold off at longer tenors, but everybody else took it as a signal that the bank will have their back.