In China, the Shanghai Composite Index inched up 0.2%.
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NEW YORK (AP) Stocks are rising in midday trading Monday following market rallies overseas after the ruling party in Japan won a key election and Friday’s strong employment report in the U.S. The gains put the Standard and Poor’s 500 index on track for a record high close. It overtook the previous highs touched in May 2015 as investors harbored greater optimism about the US economy after last Friday’s stronger-than-expected jobs report.
“Markets seem to be bullish about more stimulus coming from Japan”, said a Singapore-based analyst who did not want to be named.
Bond yields in the US, Japan, Germany, France and the United Kingdom all hit record lows last week as investors bet on more stimulus following the Brexit shock.
Oil prices were down during Asian trading, with Brent crude last off 1.7% at $47.66 per barrel and West Texas Intermediate losing 1.39% at $46.16.
According to these analysts, Abe is preparing the groundwork for “helicopter money” by signalling that he wants to take advantage of the Bank of Japan’s zero-interest-rate policy to issue bonds that will finance public-private partnerships. Dutch 10-year yields turned negative for the first time on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS jumped 1.9 percent to a one-month top.
Jonathan Corpina, senior managing partner at Meridian Equity Partners, expressed surprise that the market has bounced back so much that the S&P 500 has reached another record high.
Japanese Prime Minister Shinzo Abe instructed Economic and Fiscal Policy Minister Nobuteru Ishihara and other relevant ministers on Tuesday to draw up a large-scale stimulus package by the end of this month to shore up the economy and beat the country’s stubborn deflation, following the ruling bloc’s victory in Sunday’s House of Councillors election. It has been weakening in recent days on hopes that Abe’s victory would lead to more government spending and monetary stimulus. The yield on the 10-year Treasury note rose to 1.42 per cent from 1.36 per cent.
SMBC Nikko Securities estimates Japanese corporate profits overall will shrink 26.1 percent in the current fiscal year to next March 31 if the dollar averages 100 yen. The broader Topix index closed 1.1 percent higher at 1,300.26. Investors nevertheless remain uncertain about May’s approach to negotiating Britain’s exit from the EU.
The firmer demand for shares saw demand for U.S. bond decline and yields on 10 year government bonds rose 7 basis points to 1.43%.
The euro was little changed at $1.1059. “The greatest unknown for markets is what will happen in mainland Europe”.
Sterling eased 0.1 per cent to US$1.3233, after climbing 1.9 per cent on Tuesday.
Government forecasters had had previously assumed that consumers would repeat that spending splurge and buy goods and services aggressively before items became more expensive with the higher tax rate, at the start of next April.
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Their recovery early this year has stalled on a barrage of factors including disappointing drawdowns in United States crude and gasoline, rising USA oil drilling rig count and cuts in bullish hedge fund bets on crude to four-month lows.
