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Asia shares relieved by Powell pick, await US jobs test

Yatheendradas C.k. at 08:55 AM - Nov 03, 2017 ( ) Views: 131

Nov 03, 2017 07:48 AM IST | Source: Reuters  Moneycontorol.com

Asia shares relieved by Powell pick, await US jobs test

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.14 percent, to near its highest since late 2007. Australia's main index firmed 0.5 percent, while South Korea added 0.3 percent. 

Asian share markets edged higher on Friday as investors gave a guarded reception to Republican plans for massive US tax cuts, while welcoming the appointment of a centrist at the helm of the Federal Reserve.

Apple's stock reached new heights after it forecast holiday sales would beat market expectations, a likely positive for its many suppliers scattered across Asia.

A holiday in Japan kept volumes light, while investors observed the usual caution ahead of the US payrolls report which is expected to show a big bounce back from September's hurricane-hit result.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.14 percent, to near its highest since late 2007. Australia's main index firmed 0.5 percent, while South Korea added 0.3 percent.

 

News that Federal Reserve Governor Jerome Powell would be the new head of the US central bank was well flagged, but still something of a relief.

"He is seen as very much the continuity candidate, he hasn't dissented in his time as a Fed Governor and his thinking is seen as very much allied to the status quo data-driven style at the Fed," said David de Garis, a director of economics at NAB.

In Washington, House Republicans finally unveiled long-delayed plans for deep tax cuts that President Donald Trump has promised, setting off a frantic race in Congress to give him his first major legislative victory.

Passage of legislation that mainly favours corporations and the wealthy was far from certain, and some business groups quickly came out against it.

"The tax package will undergo several re-writes and given the contentious debate on day one the final version is likely to be delayed and will be smaller in scope," said Richard Franulovich, an economist at Westpac.

"The market reaction to the tax plan details has been equally lukewarm."

POUND PUMMELLED

While the Dow rose 0.35 percent on the back of banking shares, the S&P 500 added just 0.02 percent and the Nasdaq eased 0.02 percent.

Housing stocks also slid amid concerns over the tax plan's cap on deductions for mortgages.

Currency investors were equally underwhelmed, leaving the U.S. dollar flat against most peers as Treasury yields dipped. Against a basket of currencies it was stuck at 94.672 after a week of narrow range-trading.

It was also steady on the yen at 114.00 having repeatedly failed to break resistance in the 114.28/45 zone.

Not so steady was sterling, which took a hammering overnight when the Bank of England hiked rates for the first time in a decade but said further moves would be "very gradual".

The pound suffered its largest single day slide against the euro since October last year and was last huddled at 89.28 pence. On the US dollar it was down at USD 1.3055, having shed 1.45 percent on Thursday.

In commodity markets, spot gold was up 0.2 percent at USD 1,278.88 an ounce, after touching the highest since October 20 at USD 1,284.10.

Oil prices edged back up toward recent two-year highs as OPEC-led output cuts tightened supplies and drained inventories.

Brent crude gained 24 cents to USD 60.86 per barrel. The benchmark hit USD 61.70 on Wednesday, its highest since July 2015. US crude added 36 cents to USD 54.90, almost 30 percent above its June lows.

 


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