Asian shares gain after Wall Street hits new records, US dollar climbs on economic cheer

Pedestrians walk past a stock quotation board flashing the current foreign exchange rate of the yen against the US dollar in Tokyo. PHOTO: AFP

SYDNEY (BLOOMBERG) - Strong factory data and the prospect for American tax cuts boosted confidence in the global economy, lifting the US dollar and emboldening bulls who drove US equities to fresh record highs overnight and pushed up shares in Asia on Tuesday (Oct 3).

The Bloomberg dollar index was near strongest since mid-August, and the S&P 500 Index closed at an all-time high after data showed US manufacturing expanded at the fastest pace in 13 years. That comes on the back of an unexpectedly strong factory gauge out of China over the weekend and the Bank of Japan's quarterly Tankan survey showing the country's big manufacturers are the most confident in a decade.

Japanese shares rose, Aussie stocks gave back some of Monday's gains and oil fell closer to US$50 a barrel.

Japan's Topix index added 0.3 per cent. Australia's S&P/ASX 200 Index slid 0.3 per cent. Hang Seng futures were up 0.2 per cent with traders returning after a long weekend. Indian markets also reopen after a holiday, while those in China and South Korea remain shut.

Futures on the S&P Index were little changed as of 9:30am in Tokyo. The underlying gauge climbed 0.4 per cent on Monday. It's fallen on just three of the past 16 trading sessions.

The greenback and equities are turning out winners as money managers consider the implications of Congress passing a pro-growth tax plan and ongoing speculation that President Donald Trump will opt for a Federal Reserve boss who might pursue more aggressive policy tightening. Investors are also watching developments in Las Vegas, where more than 50 people have died in the deadliest shooting in modern US history.

The run-up in the dollar is prompting some speculators to build up positions that become profitable if the US currency weakens. Meantime, the White House ruled out talks with North Korea over its nuclear arsenal just days after Secretary of State Rex Tillerson said the US was talking to North Korea "directly, through our own channels." Elsewhere, the pound tumbled overnight on concerns about the stability of Prime Minister Theresa May's government and after British manufacturing data missed estimates.

The Bloomberg Dollar Spot Index was flat after advancing 0.5 per cent on Monday. The yen was little changed early in the Asian trading session, at 112.70 per dollar.

The euro was at US$1.1732 after sliding 0.7 per cent on Monday. The pound was flat at $1.3266 following its 0.9 per cent tumble on Monday.

Gold was little changed at US$1,272.53 an ounce, after falling 0.7 per cent on Monday.

West Texas Intermediate crude slipped 0.2 per cent to US$50.47 a barrel after sliding 2.1 per cent on Monday.

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