Asia stocks head for fresh record high as end to US government shutdown sends Wall Street rallying

Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan.
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan. PHOTO: BLOOMBERG

TOKYO (REUTERS, BLOOMBERG) - Asian stocks extended the strong start to the year on Tuesday (Jan 23) , heading for fresh all-time highs, as investors turn with optimism toward the earnings season after the U.S. government shutdown moved toward an end.

US lawmakers passed a short-term measure on Monday to fund the federal government through Feb 8, ending Wall Street's main indexes to record highs and keeping the dollar well supported.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent to a fresh record peak.

Australian stocks climbed 0.7 per cent and South Korea's KOSPI added 0.5 per cent. Japan's Nikkei was 0.45 per cent higher.

Singapore's Straits Times Index was up 0.33 per cent at 3,581.24.

World equity markets have been on a tear over the past year, buoyed by a synchronized uptick in global economic growth in a boon to corporate profits and stock valuations.

The brief US government shutdown put only a minor dent to equities, with Wall Street rallying to record highs overnight following the deal to end the impasse in Washington.

Investors in Asia will turn to the Bank of Japan's monetary policy decision later in the session for potential clues.

"The consensus is that the BOJ will stand pat on policy. So focus is on Governor (Haruhiko) Kuroda's post-meeting press conference and how he responds to questions about the BOJ having opted to trim the amount of long-term JGBs it purchased earlier this month," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

The BOJ caused ripples in the markets earlier in January by slightly reducing the amount of longer-dated Japanese government bonds (JGBs) it buys from the market at its regular debt-purchasing operations.

The yen appreciated significantly against the dollar as some interpreted the BOJ's move as a step towards eventual policy normalisation.

In contrast to Wall Street, the US dollar's reaction to news of the reopening of the US government was more subdued.

The dollar briefly popped up to 111.225 yen but last traded at 110.985.

The euro was effectively flat at US$1.2256 after gaining 0.3 percent overnight. The common currency was within reach of a three-year peak ofUS$1.2323 set on Wednesday.

The euro was supported ahead of the outcome of the European Central Bank's meeting on Thursday, which could provide clues to future shifts in the bank's monetary policy.

The pound was steady at US$1.3984 after touching US$1.3992, its highest level since June 2016's vote for Brexit, on optimism that Britain will reach a favourable divorce deal with the European Union.

Lifted by a wavering dollar, US crude oil futures rose 0.45 per cent to US$63.85 per barrel.

Spot gold slipped 0.1 per cent to US$1,333.36 per ounce after the US government shutdown ended and dulled the precious metal's safe-haven appeal.