Asian stocks climb to record highs on Thursday

Asian stocks climbed to record highs on Thursday, while the dollar strengthened against most currencies after stronger than expected US jobs data dampened hopes of near term Federal Reserve rate cuts, with inflation figures due on Friday.

Japan’s Nikkei and Topix, along with South Korea’s benchmark index, hit all time peaks, driven by gains in technology shares. MSCI’s broadest index of Asia Pacific shares rose 0.7 per cent, extending its gains to around 13 per cent so far this year.

Japanese equities have rallied following Prime Minister Sanae Takaichi’s election victory on a platform of increased economic stimulus. The yen strengthened 2.7 per cent this week to 153.01 per dollar, as investors weighed prospects of fiscal discipline after her decisive win.

US data showed job growth accelerated in January and unemployment edged lower, signalling labour market resilience and prompting investors to scale back expectations of a March rate cut. Market pricing for a 25 basis point reduction next month fell to about 5 per cent from roughly 20 per cent before the report, though traders still expect at least two cuts this year.

The two-year US Treasury yield rose to 3.505 per cent after its biggest daily jump since late October, supporting the dollar. US stocks ended largely flat on Wednesday, with the Dow slightly lower and the S&P 500 and Nasdaq little changed.

Attribution: Reuters