By David Fiander
Equities Risk Manager
CMC Markets Singapore
With reporting season still delivering solid results the Dow Jones Industrial and S&P 500 were both positive to the tune of 0.5% providing a solid platform for a positive Asian session. With a general optimistic tone in markets as well as no major economic data or negative headlines to stop the momentum, Asian markets delivered on the promise with all of the major indices in positive territory.
The Nikkei ended the session above the 11,000 level to hit a fresh 33 month high today. A combination of a weaker Yen aiding exporters, optimistic earnings expectations for reporting season which has just kicked off, and a risk-on mentality in markets in general helped push the bourse 2.3% higher by the close. Yahoo Japan Corp jumped 17.14% on the day after announcing a share buyback as well as a jump in earnings and dividend forecasts.
The Australian market hit a fresh 21 month high in its 10th straight session of gains which is its longest winning streak since 2003. The Energy and Materials sectors both posted gains of close to 1% each as Crude Oil pushed towards USD$100 per barrel, Copper hit a 3 week high and the CRB index gained in the overnight session. The Hang Seng was not to be outdone and also hit a 21 month high as it rose 0.7% on the day. China Railway construction jumped 3.9% on reports the railway ministry plans to spend $18.8bn to buy railway cars this year which is a jump of over 8% from their expenditure in 2012.
The local Straits Times Index has also kept up with the risk-on rally and is sitting on a decent gain of 0.7%. City Developments has been the biggest gainer on the day, adding 2.7% after recently coming under pressure when the government introduced measures to cool the local property market.
Gold gained 0.3% today to just over $1,668/oz but it is still down this year after 12 straight years of gain.
The Yen has resumed its slide against its major currency pairs as a risk-on mentality combined with expectations that Japan will expand monetary stimulus had investors unwinding their Yen positions. The Yen slid 0.2% to 90.90 per USD and now sits quite comfortably above the 90 handle after previously finding resistance there.
The main data points to look out for in tonight’s session come from the US where we will firstly see the latest ADP employment report for January which is expected to show a drop in jobs from 215K in December to 163K in January. We also have the Federal Funds Rate which is expected to remain unchanged but investors will be casting a close eye over the accompanying FOMC statement for any hints about magnitude and duration of future stimulus.