Global Markets Wall Street rally underpins Asian shares

Business & Markets 2013
Written by Reuters
Wednesday, 29 May 2013 08:27
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TOKYO (May 29): Asian shares were steady and the dollar remained
firm on Wednesday as U.S. stocks rallied to record highs overnight on
signs of resilience in the U.S. economy and expectations of continued
monetary policy support.
The Dow Jones industrial average hit another record high on Tuesday
as data showed U.S. home prices accelerated by the most in nearly
seven years in March while consumer confidence picked up in May to its
highest in more than five years.
The stock rally lifted benchmark 10-year U.S. Treasury yield to a
13-month peak around 2.17 percent. A strong rebound in Japanese
stocks after last week's hammering also fed to speculation about
reduced incentives to hold safe-haven U.S. government debt.
"The bullish tone at the start of the week would seem to indicate that
investors are not yet convinced that evidence surrounding the economy
is firm enough to corner the Fed chairman and force him into leading a
retreat from the current pace of bond purchases," Andrew Wilkinson,
chief economic strategist at Miller Tabak & Co in New York, said in a
note to clients.
The rally seems to be "little other than a sense that last week's setback
for U.S. and then Japanese stocks was justifiable in the big scheme of
things. Pullbacks occur," he said, adding that for now, investors seem to
still want to test recent highs.
MSCI's broadest index of Asia-Pacific shares outside Japan was
steady, staying above Friday's five-week low of 464.99.
Australian shares were up 0.2 percent while South Korean shares opened 0.4 percent higher.
"The main board is likely to start up as overseas markets rallied on the previous day. However, autos could weigh due to the
weak yen and cap gains later in the session," said Shawn Oh, an analyst at Daishin Securities, of Seoul shares.
The dollar inched up 0.1 percent against the yen to 102.48, recovering from a two-week low of 100.66 yen hit on Friday. THe
dollar scaled a 4-1/2 year peak of 103.74 yen on May 22.
The dollar index measured against a basket of six key currencies was up 0.3 percent to hover near its highest since July 2010
of 84.498 reached on May 23.
The Nikkei stock average opened up 1.3 percent after closing up 1.2 percent the day before.
"The Nikkei is in oversold territory, so buying should emerge," said Hiroichi Nishi, equity general manager at SMBC Nikko
Securities. "Exporter shares will be in focus again as the yen resumes weakening, but we have to watch interest-rate related
issues."
The Nikkei slumped 7.3 percent on Thursday, its largest single-day loss since the March 2011 earthquake and tsunami, as
global financial markets were shaken by weak industrial production in China and concerns the U.S. Federal Reserve could
scale back its current aggressive monetary stimulus sooner than previously thought.
Speculation about the Fed's policy has weighed on the Australian dollar, which has skidded nearly 8 percent in May, the
largest monthly drop since September 2011. The Aussie plumbed its lowest in 19 months on Wednesday after key support
around $0.9581 finally gave way.
U.S. crude futures were off 0.3 percent at $94.74 a barrel. - Reuters