Asian stocks reach decade highs despite political uncertainty

Asian stock markets closed Wednesday at decade highs after a strong lead from Wall Street, despite the dollar fell on the back of rising concerns that Trump's tax plan could be stopped.

Australia ASX +33.70 +0.58% 5,840.80 CLOSED

Shanghai Comp +5.30 +0.16% 3,388.28 CLOSED

Hang Seng Index -3.10 -0.01% 28,487.73 OPEN

Nikkei 225 +57.76 +0.28% 20,881.27 CLOSED

TSEC 50 Index +108.38 +1.03% 10,641.19 CLOSED

Market sentiment was supported by an upgrade to the global economic growth forecast by the International Monetary Fund. According to the organization, economic growth in 2017 and 2018 will be one-tenth of a percentage point higher in each year, compared to their previous report.

As the third-quarter earnings season gets closer, Wall Street’s top three indexes set new record-highs. The Dow Jones Industrial Average rose 0.3 percent, the S&P 500 grew 0.2 percent and the tech-heavy Nasdaq added 0.1 percent on Tuesday.

Yesterday, investors also kept an eye on Spain, where the Catalan president, Carles Puigdemont, announced that he will suspend a declaration of independence “to open a period of dialogue” with Mariano Rajoy’s federal government.

The political uncertainty caused by this event supported safe haven assets such as gold, which ended the session around $1,289.06 an ounce, its highest level in the last two weeks.

No relevant news were released in Asia. Ahead in today’s session, attention will be mainly directed to the JOLTs job openings for August at 14:00 GMT and Fed’s minutes at 18:00 GMT.

Investors will closely monitor the latest in search for hints on future changes to the current monetary policy configuration, meaning interest rates and unwinding the balance sheet.

Meanwhile, market players are trying to figure out who will replace Fed Chairwoman Janet Yellen. At the time, Fed Governor Jerome Powell seems to be the most likely choice for Trump.

Earlier in the day, Dallas Federal Reserve Bank President Robert Kaplan, a voting member of the Federal Open Market Committee, said he would like to see more signs of higher inflation before moving forward with another interest rates this year.

Fort Financial Services