Asia stocks near decade-high on global equity surge, US dollar sags on Fed minutes

Asian stocks were near a decade high on Thursday (Oct 12), riding the bull run in global equity markets.

TOKYO (REUTERS) - Asian stocks were near a decade high on Thursday (Oct 12), riding the bull run in global equity markets, while the US dollar sagged after the Federal Reserve showed a guarded view towards inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.15 per cent and is within a hair of the decade high touched in the previous session.

Japan's Nikkei was up 0.4 per cent after brushing 20,980.92, its highest since December 1996. South Korea's Kospi added 0.1 per cent to mark a fresh record high.

Asia took cues from Wall Street, where major indexes rose to yet another set of record closing highs overnight following a report that a market-friendly candidate was being pushed as successor to Janet Yellen at the helm of the Fed.

Broader investor risk sentiment has improved this week after Catalonia dialed back plans to break away from Spain, with MSCI's 47-country world stocks index reaching a record high.

Global equities now appear to be taking geopolitical developments such as the secessionist push in Spain and tensions on the Korean peninsula in their stride to reach those record tops.

"Fundamentally, the global economy is in decent shape. Corporate sentiment is also sound as evidenced by strong data like the Chinese PMI, US ISM and Japanese tankan. All these factors are leading to the rise in global stocks," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

"Financial markets will remain wary of geopolitical headlines. But barring actual military conflicts, negative responses by equities are expected to be short-lived."

The dollar index against a basket of six major currencies slipped to a two-week low of 92.891 following the release of the Fed's last policy meeting on Sept 19-20.

Fed policymakers had a prolonged debate about the prospects of a pickup in inflation and the path of future interest rate rises if it did not, the minutes showed.

While this did little to cool strong expectations for the Fed to raise interest rates in December, it did make the central bank appear slightly less hawkish than it appeared right after the September policy meeting when it signalled the year-end monetary tightening.

The dollar was particularly weak against the euro as relief over Catalonia stopping short of a formal declaration of independence supported the common currency.

The euro was 0.1 per cent higher at US$1.1871, its highest since Sept 25 and on track for a fifth straight day of gains.

The dollar was 0.1 per cent lower at 112.370 yen.

In commodities, crude oil prices fell after rising for three successive sessions.

Brent crude futures were down 0.5 per cent at US$56.66 per barrel. The contracts had risen for the third day on Wednesday as Opec's forecast for higher demand in 2018 and heightened tensions in Kurdistan supported prices.

Spot gold was up 0.15 per cent at US$1,293.78 an ounce, supported by a weaker dollar.

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