Asian stocks ride Wall Street momentum before final US presidential debate

Pedestrians walk along Wall Street in New York.
Pedestrians walk along Wall Street in New York. PHOTO: BLOOMBERG

SINGAPORE (REUTERS) - Asian stocks advanced in early trading on Thursday (Oct 20), propelled by strong US earnings and a jump in oil prices to a 15-month high on Wednesday, ahead of the third and final US presidential debate before the Nov 8 election.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent. Japan's Nikkei gained 0.3 per cent.

Overnight, the S&P 500 index and the Dow Jones Industrial Average closed up 0.2 per cent, after Morgan Stanley posted a better-than-expected quarterly profit to round out a string of solid results from big US banks.

With 70 companies in the S&P 500 having reported earnings through Wednesday morning, 80 percent have topped earnings expectations. Third quarter earnings are now expected to increase 0.5 per cent, according to Thomson Reuters I/B/E/S, which would be the first quarter of growth in five.

"We're up because the (earnings) numbers are so great, the forward guidance is great and the banks just knocked it out of the park," said Ken Polcari, Director of the NYSE floor division at O'Neil Securities in New York.

Energy shares also contributed to the gains on Wall Street, as oil prices jumped after a surprisingly large inventory drop of 5.2 million barrels, compared with a forecast for a 2.7-million barrel build. It was the sixth week of declines in seven weeks.

US crude slipped 0.2 per cent to US$51.50 in early Asian trade on Thursday, after surging 2.6 per cent to close at US$51.60 in the previous session. It earlier touched US$51.93, the highest since July 2015.

Brent crude climbed 1.9 per cent to US$52.67 on Wednesday.

Markets will be watching Republican presidential nominee Donald trump and Democrat Hillary Clinton debate at 9am Singapore time at the University of Las Vegas as Trump tries to reverse the momentum in an election that polls show is tilting away from him.

Trump has been damaged recently by several accusations of groping women - which he denies - and concerns about his claims that the election will be rigged against him.

"One of the six topics is the US economy, and any clarification of policy in this area could influence trading today," Michael McCarthy, chief market strategist at CMC Markets in Sydney, wrote in a note. "Secondly, a clear win for either candidate is important. Markets are likely to buy Clinton and sell Trump."

The Mexican peso was little changed versus the dollar on Thursday before the debate, retaining this week's gains. The US dollar has dropped 2.6 per cent to 18.517 peso this week.

With Trump's criticism of Mexican migration and trade putting the US's southern neighbour at a disadvantage if he wins, a stronger Mexican peso reflects a lower chance of a Trump win.

The dollar was also steady against the yen, holding at 103.440 yen early on Thursday after falling 0.4 per cent on Wednesday.

The euro was flat at US$1.0971, ahead of the European Central Bank's policy meeting on Thursday.

Investors are focused on whether ECB President Mario Draghi will give any indications that the central bank will begin tapering its bond purchase program when it meets on Thursday.