Asian shares took their cues from Wall Street and kicked off a holiday-shortened week on a strong footing on Monday as oil prices recovered, while the euro touched a fresh two-year low against the greenback on divergent monetary policy expectations.
Spreadbetters at IG expected Britain’s FTSE 100 to open up by 32 points, or 0.5 percent. They predicated Germany’s DAX would edge up by 5 points, or 0.1 percent, and France’s CAC 40 would open up by 13 points, or 0.3 percent.
“Ahead of European trade, we are calling the major bourses firmer, said Melbourne-based IG Markets strategist Stan Shamu, “with some choppy price action likely.”
MSCI’s broadest index of Asia-Pacific shares outside Japan extended gains and was up 1.4 percent. Japan’s Nikkei stock average pared early gains but managed to eke out a 0.1 percent rise ahead of a Japanese public holiday on Tuesday, while Australian shares surged 1.9 percent.
“We’re seeing a positive lead coming from Wall Street, (the) bounce in oil prices and energy stocks,” said Leanne Jones, market analyst at Bell Direct.
“If we can continue seeing this Santa Claus rally continue then I suppose we’ll finish the year on a positive note,” Jones added.
Oil took a breather after its recent gyrations, with U.S. crude adding 1 percent to $57.69 a barrel, following a week in which it shed 2 percent to extend the rout that has nearly halved its value since June. Brent rose 1.2 percent to $62.03.
Activity was likely to be thin this week, with many investors away for Christmas and the run-up to New Year holidays.
On Wall Street on Friday, U.S. shares rose, with the S&P 500 coming within a few points of its closing record high. That index has risen 5 percent since Wednesday to log its best three-day gain since 2011, after the U.S. Federal Reserve said it would be “patient” on raising benchmark U.S. interest rates, depending on domestic growth and inflation.
Three Fed officials on Friday offered clues on the thinking inside the U.S. central bank as it gears up to raise interest rates, likely in 2015.
Richmond Fed President Jeffrey Lacker echoed Fed Chair Janet Yellen’s view at her press conference two days earlier that the drop in energy prices will boost U.S. consumer spending, and said that he supported the central bank’s addition of the word “patient” to describe its interest rate guidance in its policy statement last week. Minneapolis Fed President Narayana Kocherlakota said rate hikes in 2015 would create “unacceptable” downside risks to U.S. inflation.
San Francisco Fed chief John Williams told Bloomberg Radio it seems “reasonable” for the Fed to raise rates in mid-2015.
By contrast, ECB governing council member Luc Coene said in a newspaper interview on Saturday that the bank should start buying government bonds to tackle poor investor confidence and low inflation in the euro zone.
The euro edged up about 0.2 percent to $1.2252, after earlier dropping as low as $1.2220, its lowest level since August 2012.
Against the yen, it added 0.3 percent to 146.46 yen, but remained a considerable distance from a six-year high of 149.79 touched earlier in December.
Calming some fears about political stability in the euro zone, Greek Prime Minister Antonis Samaras offered on Sunday to bring pro-European independents into the government and hold new elections in late 2015 if lawmakers back him to elect a new president.
The surprise announcement came ahead of the second round of voting for president and followed a disappointing result for the government in the first round last week, when it won less support than expected. Two remaining rounds of voting are planned on Dec. 23 and Dec. 29.
Against the yen, the dollar was steady on the day at 119.51, still well away from a 7-1/2 year high of 121.86 touched this month but also off last week’s low of 115.56 marked before the Fed’s statement.
On Friday, the Bank of Japan maintained its pledge of increasing base money, or cash and deposits at banks, at an annual pace of 80 trillion yen ($669.40 billion) through aggressive asset purchases. Governor Haruhiko Kuroda voiced confidence the bank will meet its ambitious price target despite a recent plunge in oil prices.
The dollar index, which tracks the U.S. unit against a basket of six rival currencies, inched down about 0.2 percent to 89.458, but was still within sight of a near nine-year peak of 89.645 set on Friday.
Spot gold added about 0.3 percent to $1,198.60 an ounce, after losing about 2 percent last week on worries over a U.S. interest rate hike next year.
Source : Reuters
