By Wayne Cole
SYDNEY (Reuters) – Asian stocks hit two-year highs on Thursday following Wall Street’s record high, as cheap cash drove large-cap tech darlings up, though Sino-US tensions grew. urged caution as the session progressed.
The largest MSCI index for Asia-Pacific stocks outside of Japan () edged up 0.1% after hitting its highest level since August 2018.
Japan’s Nikkei () fell 0.4% from levels not seen since mid-February, while South Korea () fell 0.8% as an increase in coronavirus cases took ended four days of hike.
Even futures on S&P 500 () fell 0.2%, although this follows five consecutive sessions of gains. EUROSTOXX 50 futures () and futures () were little changed.
Asian investors have been more wary over the military standoff in the South China Sea, as Washington blacklisted 24 Chinese companies while Beijing reportedly tested missiles in the region on Wednesday.
Yet global markets are still focused on the endless liquidity pumped by central banks.
Federal Reserve Chairman Jerome Powell is expected to present a more flexible approach to policy on Thursday, including a change to target an average inflation rate of around 2%, which will allow rates to stay extremely low for longer .
“So, with US-Chinese tensions apparently not a major concern, the deluge of fiscal and monetary support remains the prevailing tailwind for risky assets of which large-cap beneficiaries are the beneficiaries,” said Rodrigo Catril, senior FX strategist at NAB.
The Dow () ended Wednesday up 0.3%, while the S&P 500 () climbed 1.02% and the Nasdaq () climbed 1.73%. Gains were again concentrated in technology majors with Netflix Inc (O 🙂 up 11.6% and Facebook Inc (O 🙂 8.2%.
Liquid largesse from central banks kept sovereign bonds well supported even as stocks hit new highs. Yields on 10-year Treasuries () stabilized at 0.68%, after finding strong offers around 0.73%.
At the same time, the prospect of even greater Fed easing has kept the dollar on the defensive. Against a basket of currencies, it remained stuck at 92.916 () on Thursday and uncomfortably close to the recent two-year low of 92.124.
The euro held steady at $ 1.1832 () and near its recent high of $ 1.1965, while the dollar fell to 105.96 yen
The dollar has also trended steadily lower, reaching depths not seen since mid-January at 6.8809 yuan.
In commodity markets, gold fell back to $ 1,943 an ounce
Oil prices were buoyant as US producers shut down production in the Gulf of Mexico before Hurricane Laura. The storm is perhaps the most powerful to crash into Louisiana and is heading straight for the major oil refining town of Port Arthur, Texas. [O/R]
Brent futures () edged up 11 cents to $ 45.75 a barrel, while U.S. crude () fell 2 cents to $ 43.37.
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