Asian shares on Tuesday have eked, as the potential for economic stimulus in the United States lifted the dollar, bond yields, and Wall Street stocks. Wall Street indexes have hit historic peaks on Monday, with the benchmark S&P 500’s market value topping $20 trillion as investors bet tax cuts promised by President Donald Trump would boost the economy.
MSCI’s Asia-Pacific shares who has the broadest index outside Japan has edged up to 0.1 percent, trying for its fifth straight session of gains. Japan’s Nikkei eased 0.1 percent as it has struggled with the stiff chart resistance that has held from mid-December. Stocks in Shanghai were barely changed, were Australia managed to 0.4 percent gain.
The Dow rose 0.7 percent, while the S&P 500 and Nasdaq gained 0.52 percent. Apple, a component of all three indexes has risen from 0.9 percent to close at the highest record for the first time since 2015.
The dollar gained on a basket of currencies 101.020, near its strongest from Jan. 20, while the euro was put down for the fourth session in a row at $1.0596.
The dollar achieved two-week top on the yen following reports that Trump did not discuss the currency or on its strength at the weekend talks with visiting Japan Prime Minister Shinzo Abe. The dollar was last at 113.72 yen.
Parsing Fed policy
All looks up to Fed Chair Janet Yellen’s semi-annual testimony on policy due on Tuesday and Wednesday.
Tom Porcelli, chief US economist at RBC Capital Markets, believes Yellen would outline the case for at least three rate rises this year, rather than two that the market implies. One thing investors will watch is that how forceful Yellen is in keeping alive the rise of hike in March, something the market has priced in a distant chance.
Dallas Fed President Robert Kaplan on Monday argued it should be moved soon to avoid falling behind the curve, especially as the fiscal policy could drive to grow faster and inflation. “Given the uncertainty of timing on the fiscal agenda and the relatively modest uptick in inflation thus far this year, we think it will be difficult for the committee to get enough members on board for a hike in March,” has said by Porcelli at RBC.
“But Yellen could certainly move the ‘perception’ needle on this.”
In commodity markets where metals were on a tear thanks to supply disruptions and strong Chinese demand. After the disruption, the Copper hit its highest since May 2015 after shipments from the world’s two biggest copper mines. Iron ore climbed to it since August 2014 amid reports China plans to cut the steel capacity by at least half in 28 cities across five regions. Oil recouped some ground on OPEC-led efforts to cut output, though rising production elsewhere kept prices to a narrow range that has contained them so far this year.