Asian Shares, Dollar Lifted By Hopes For Ukraine Progress

Big 5

Asian stocks rose on Tuesday after Wall Street climbed to its highest level since late July, while the dollar got some help from a rebound in U.S. Treasury yields and hopes of some easing of tensions in the Ukraine crisis.

Financial spreadbetters predicted the cheer would spread to European trade, where they expected Britain’s FTSE 100 .FTSE to open 18 to 19 points higher, or up 0.3 percent; Germany’s DAX .GDAXI to open 42 to 49 points higher, or up 0.5 percent; and France’s CAC 40 .FCHI to open 9 to 12 points higher, or up 0.3 percent.

“While no one is suggesting the crisis in Ukraine is anywhere near resolved, given that the fighting remains ongoing as Kiev’s forces tighten their grip, European markets look set to take their cues from last night’s positive finish in the U.S., and open higher this morning,” Michael Hewson, chief market analyst at CMC Markets, said in a note.

Foreign ministers from Russia, Ukraine, Germany, and France gathered in Berlin over the weekend to discuss talks for a ceasefire or a political solution, and Russia’s Foreign Ministry said on Monday that a “certain progress” was achieved during the talks.

Ukrainian government forces reported new successes overnight, building on a weekend breakthrough, when troops raised the national flag in Luhansk, a city held by pro-Russian separatists since fighting began in April.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added about 0.6 percent. Japan’s Nikkei stock average .N225 ended up 0.8 percent, rising for the seventh straight day.

“Confidence is back as we’ve got strong U.S. shares and upbeat data from the U.S.,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

U.S. stocks marked solid gains on Monday after upbeat housing data, and the situation in Ukraine offered some sign of hope that the conflict would be contained. The Nasdaq Composite .IXIC topped the key 4,500 mark for the first time since March 2000.

S&P 500 e-mini futures ESc1 were up 0.2 percent, which could signal more U.S. gains later in the day.

On Monday, U.S. homebuilder sentiment rose in August to its highest since January, the National Association of Home Builders said, marking a third straight monthly gain and beating the mean estimate of analysts polled by Reuters.

The better-than-expected figure helped U.S. Treasury yields pull away from recent lows, with the yield on the benchmark 10-year U.S. Treasury note US10YT=RR at 2.398 percent in Asia, compared with its U.S. close of 2.387 percent on Monday.

It had dropped as low as 2.30 percent on Friday, its lowest since June 2013.

Later in the week, investors will be keeping a close eye on Wednesday’s release of minutes from the Federal Reserve’s July policy meeting as well as comments from the Fed’s summit in Jackson Hole, Wyoming, which starts on Thursday.

“Some Fed officials have been talking about the need for an earlier rate hike so investors will also be looking to see if there is a more hawkish bias to the FOMC minutes,” said Kathy Lien, managing director at BK Asset Management.

Janet Yellen is slated to speak on Friday, her first Jackson Hole appearance at the helm of the U.S. central bank.

The dollar bought 102.61 yen JPY=, up about 0.1 percent, while the euro edged down about 0.1 percent to $1.3355 EUR=, not far from this month’s nine-month low of $1.3333. Against the safe-haven yen, the euro rose slightly to 137.04 EURJPY=R.

The dollar index, which tracks the U.S. unit against a basket of rivals, added about 0.1 percent to 81.615 .DXY, moving back in the direction of an 11-month high of 81.716 hit earlier this month.

In commodities trading, spot gold steadied on the day at $1,299.64 an ounce XAU=, but remained below the $1,300 level against the backdrop of improved risk sentiment.

U.S. crude CLc1 added about 0.4 percent to $96.78 ahead of the September contract’s expiration on Wednesday. Brent crude LCOc1 rose about 0.3 percent to $101.85 after shedding nearly $2 a barrel overnight to its lowest price in over a year.

Source : Reuters