January 23, 2018
By Shinichi Saoshiro
TOKYO (Reuters) – Asian stocks advanced on Tuesday after U.S. senators struck a deal to end a three-day government shutdown, sending Wall Street’s main indexes to record highs and keeping the dollar well supported.
U.S. lawmakers passed a short-term measure on Monday to fund the federal government through Feb. 8.
MSCI’s broadest index of Asia-Pacific shares outside Japan < .MIAPJ0000PUS> rose 0.2 percent to a fresh record peak.
Australian stocks < .AXJO> climbed 0.7 percent and South Korea’s KOSPI < .KS11> added 0.5 percent. Japan’s Nikkei < .N225> was 0.45 percent higher.
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 U.S. 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. [.N]
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 normalization.
In contrast to Wall Street, the dollar’s reaction to news of the reopening of the U.S. government was more subdued.
The dollar briefly popped up to 111.225 yen
The euro was effectively flat at $1.2256
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 $1.3984
Lifted by a wavering dollar, U.S. crude oil futures
(Reporting by Shinichi Saoshiro; Editing by Shri Navaratnam)
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