Asia shares climb to 3-week highs on vaccine optimism, US dollar retreats

MSCI's broadest index of Asia-Pacific shares outside of Japan was up 0.3 per cent.
MSCI's broadest index of Asia-Pacific shares outside of Japan was up 0.3 per cent.PHOTO: REUTERS

SYDNEY (REUTERS) - A gauge of Asian shares climbed to three-week highs on Wednesday (April 7) 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 per cent for its second straight day of gains. It went as high as 697.01, a level last seen on March 18.

Japan's Nikkei was a shade higher while Australian shares rose 0.6 per cent and South Korea's KOSPI added 0.5 per cent.

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

Singapore's Straits Times Index edged down 0.01 per cent as at 10.40am local time.

"The US 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.

Overnight, the three major Wall Street indexes closed lower, a day after the S&P 500 and the Dow rose to record levels driven by optimism from a greater-than-expected jobs report last Friday and data showing a dramatic rebound in the US services industry on Monday.

The Dow fell 0.3 per cent, the S&P 500 lost 0.10 per cent and the Nasdaq Composite eased 0.05 per cent.

Investors also weighed the latest US 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 per cent this year from 5.5 per cent, reflecting a rapidly brightening outlook for the US economy.

With the upcoming earnings season expected to show S&P profit growth of 24.2 per cent 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 US Treasury yields dropped sharply to 0.874 per cent, weighing on the US 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.

The dollar index fell to 92.258.

The euro was flat at US$1.1874, sterling was slightly higher at US$1.3835, the Australian dollar rose to US$0.7668, while the Japanese yen was higher at 109.62.

Crude oil prices rose on the prospects for stronger global economic growth amid increased Covid-19 vaccinations and a report showing that crude inventories in the United States, the world's biggest fuel consumer, fell in the week-ended April 2.

Brent crude futures for June rose by 34 cents, or 0.5 per cent, to US$63.08 a barrel while US crude for May was up 32 cents, or 0.5 per cent, to US$59.65.

Spot gold was off a touch at US$1,737.6 an ounce.