Asian shares hit 18-month top in festive cheer; oil, gold hold gains

A man walks by an electronic stock board of a securities firm in Tokyo, Japan, on Dec 18, 2019. PHOTO: AP

SYDNEY (REUTERS) - Asian shares jumped to an 18-month high on Friday (Dec 27) while gold and oil prices stayed buoyant in a holiday-shortened week, as investor optimism was boosted by hopes a United States-China trade deal would soon be signed.

Traders returned from their Christmas and Boxing Day break to digest comments from Beijing that it was in close contact with Washington about an initial trade agreement, shortly after US President Donald Trump talked up a signing ceremony for the recently struck Phase One trade deal.

MSCI's broadest index of Asia-Pacific shares outside Japan jumped 0.55 per cent to 555.25, a level not seen since mid-2018. It is up about 16 per cent so far this year.

Japan's Nikkei was flat, but on track for a near 20 per cent rise this year, the biggest annual increase since 2013.

The country's industrial output slipped for a second straight month in November in another sign the economy is cooling. Japan has approved a record budget for the coming fiscal year, in a bid to shore up growth.

Australia's benchmark index rose 0.2 per cent while Chinese shares were upbeat after Beijing laid out additional plans to bolster its economy, including infrastructure investments. The blue-chip CSI300 added 0.56 per cent.

The rally in global share indices is in sharp contrast to a plunge late last year when fears about the impact of the Sino-US trade war had sapped investor confidence.

The worries scuttled capital expenditure plans over much of 2019, but strong employment and signs of an improving global economy suggest that will change next year.

The US Federal Reserve's policy easing, economic data that has come in above low expectations, and corporate profits have helped lift stocks this year along with trade-related optimism.

Market participants are now waiting for fourth-quarter earnings in January for indication on whether sentiment among corporates has actually improved.

Overnight, MSCI's all-country world index and Wall Street's Dow Industrials, the benchmark S&P 500 and the technology-rich Nasdaq all closed at record highs.

MSCI's gauge of stocks across the globe gained 0.38 per cent to a record, on track for its best year since 2009. The index has gained 24 per cent this year.

Wall Street was boosted overnight by US-China trade optimism and gains in

Amazon shares jumped 4.4 per cent after Mastercard said US shoppers spent more online during the holiday season than in 2018, with e-commerce sales hitting a record.


Both oil and gold held on to their recent gains.

Brent crude, the global benchmark, extended gains into a fourth session, hitting US$68.09 per barrel, the highest since mid-September. US West Texas Intermediate crude gained 14 cents to US$61.82 a barrel.

Brent has rallied about 25 per cent in 2019, supported by supply cuts by Opec and allies including Russia.

Gold prices were a bit shy of a two-month high at US$1,509.29 an ounce. They have been on the rise recently as a hedge against US dollar weakness and increased equity market volatility in 2020.

The rally in oil and gold boosted commodity-linked currencies in the past 24 hours with the New Zealand dollar up 0.6 per cent and the Australian dollar up 0.3 per cent.

The US dollar was a tad weaker against the Japanese yen at 109.47.

The dollar index was barely changed against a basket of six major currencies, with the euro up a notch and the British pound mostly flat.

Join ST's Telegram channel and get the latest breaking news delivered to you.