Asian shares climb to three-week highs on vaccine optimism, dollar retreats

Asian shares

Asian shares climb to three-week highs on vaccine optimism, dollar retreats

A gauge of Asian shares climbed to three-week highs on Wednesday as investors eyed the upcoming earnings season for further signs of a global economic recovery, while the dollar slipped to a two-week low.

MSCI’s broadest index of Asia-Pacific shares outside of Japan was up 0.3% for its second straight day of gains. It went as high as 697.01, a level is last seen on March 18.

Japan’s Nikkei was a shade higher while Australian shares rose 0.6% and South Korea’s KOSPI added 0.5%.

Chinese shares, however, were weaker with the bluechip CSI300 index down about 1% after a strong rally last week.

“The U.S. economy is experiencing the first effects of a powerful double-dose vaccine of broad inoculation and fiscal stimulus,” said David Kelly, chief global market strategist at J.P. Morgan Asset Management.

“The reality is that forecasts remain very uncertain…(but) early signs show the recovery is accelerating, suggesting a faster return to ‘normal’ than many had dared to hope a few months ago,” Kelly added.

Investors also weighed the latest U.S. job openings report, which showed that vacancies rose to a two-year high in February while hiring had its biggest gain in nine months amid increased COVID-19 vaccinations and additional government stimulus.

Moreover, the International Monetary Fund raised its global growth forecast to 6% this year from 5.5%, reflecting a rapidly brightening outlook for the U.S. economy.

With the upcoming earnings season expected to show S&P profit growth of 24.2% from a year earlier, according to Refinitiv data, investors will be watching to see whether corporate results further confirm recent positive economic data.

Elsewhere, the five-year U.S. Treasury yields dropped sharply to 0.874%, weighing on the U.S. dollar. The five-year Treasury yield is seen as a major barometer of how much faith investors have in the Federal Reserve’s pledge that it does not expect to raise interest rates until 2024.

The dollar slipped to a two-week low against a basket of world currencies, with traders taking advantage of its strong March performance as dropping Treasury yields pressured the greenback.

Mainland Chinese stocks were down by the early morning. The Shanghai Composite was down by 0.28% to 3,472.33. Hong Kong’s Hang Seng Index was up about 0.97% to 28,657.62.

Japan’s benchmark Nikkei average Nikkei 225 is trading down  0.12  percent at 29,730.97 on Wednesday, while the broader TOPIX  100 fell 1.49 per cent to 1,266.47. South Korea’s Kospi was up by 0.33% to 3,137.00.

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Asian shares

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