Asian Stocks, Dollar Rally On Hopes For Global Growth

Asian share markets were mostly higher on Wednesday as the World Bank upgraded its outlook for the global economy while the dollar extended gains in the wake of surprising strength in U.S. consumer spending.

European stocks were expected to start with a spring in their step, according to financial bookmakers. Britain’s FTSE 100 .FTSE, Germany’s DAX .GDAXI and France’s CAC 40 .FCHI were seen opening up around 0.3 percent.

A pullback in the yen was welcomed by the Japanese market, with the Nikkei .N225 bouncing 2.2 percent after suffering its sharpest daily drop in five months on Tuesday.

Progress elsewhere was patchy with investors suffering whiplash after several days of wild swings. Singapore .FTSTI added 0.6 percent as did Taiwan .TWII, but MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eked out just 0.1 percent.

Helping the better mood overall, the World Bank upgraded its forecast for global growth this year by two tenths to 3.2 percent, and predicted a faster pace for both 2015 and 2016.

While the World Bank trimmed forecasts for some developing nations, including China, growth as a whole was seen accelerating to 5.3 percent this year.

“The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead,” said bank chief Jim Yong Kim.

Data from China on Wednesday showed new bank lending and money supply growth missed forecasts for December, suggesting the central bank’s efforts to tap the brakes on credit expansion to contain debt levels was gaining traction.

Shares in Shanghai dipped 0.4 percent .SSEC, but there was little obvious impact elsewhere in the region.

The dollar extended its rally to 104.40 yen, leaving behind Tuesday’s trough of 103.00. The euro also firmed on the yen to 142.34 yen, but lost ground on the dollar to $1.3634.


The U.S. currency had sprung ahead on Tuesday after retail data soothed the hurt done by last week’s disappointing payrolls report. While the headline measure of retail sales rose only a modest 0.2 percent, a core measure favored by analysts beat all expectations with a jump of 0.7 percent.

“Growth in final sales, particularly household consumption, appears to have picked up sharply in Q4,” said Barclays economist Peter Newland. The bank lifted its forecasts for economic growth in the quarter to an annualized 3.5 percent.

That, combined with a burst of merger activity and earnings beats by Wells Fargo (WFC.N) and JPMorgan (JPM.N), helped lift the Dow .DJI 0.71 percent. The S&P 500 .SPX added 1.08 percent and the tech-laden Nasdaq .IXIC jumped 1.69 percent.

The better economic news left 10-year U.S. Treasury yields up 5 basis points at 2.87 percent, while slugging Eurodollar and Fed funds futures.

Price moves have been wild recently as the market tries to second-guess the speed of tapering by the Federal Reserve, and when it might actually start raising interest rates.

Two of the most hawkish of Fed officials, Dallas Fed chief Richard Fisher and Charles Plosser at the Philadelphia Fed, on Tuesday advocated sticking with tapering.

It will be the turn of the more dovish head of the Chicago Fed, Charles Evans, to give the next speech later on Wednesday.

In commodity markets, a firmer dollar and rising equities shoved gold back to $1,239.15 an ounce, and off a high of 1,255.00 hit Tuesday.

Oil prices were softer after a mixed performance overnight. U.S. crude dipped 8 cents to $92.51 a barrel, while Brent eased 17 cents to $106.22.

Source : Reuters