Asian stocks extended gains for a fifth straight day on Wednesday as Wall Street hit new peaks while the euro consolidated recent gains as immediate concerns of political uncertainty in the euro zone receded. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 percent, hovering near their highest since June 2015. Early Asian stock markets such as New Zealand and South Korea were key gainers.
A strong finish to U.S. markets was the main driver. The Nasdaq Composite hit a record high on Tuesday, while the Dow and S&P 500 brushed against recent peaks as strong earnings underscored the health of corporate America.
Fanning the market’s rally were reports that President Donald Trump’s tax reform proposals, due to be announced on Wednesday, would include a slashing of the corporate tax rate and lower taxes on offshore earnings stockpiled by U.S. companies overseas.
In currency markets, the euro built on strong gains posted this week after business-friendly centrist Emmanuel Macron won the first round of the French vote on Sunday and opinion polls indicated less support for the eurosceptic Marine Le Pen.
While that is not expected to sway the European Central Bank into further action at Thursday’s meeting, policymakers see scope for sending a small signal in June towards reducing monetary stimulus, according to sources, another factor underpinning the single currency.
“In our view, downside risks to growth have actually decreased with the outcome of the first round of the French election…the underlying tone of the press conference should still be positive,” Holger Sandte, a strategist at Nordea markets wrote in a note.
The euro was steady at $1.09285, retaining most of Monday’s 1.3 percent gain. On Monday, it posted its strongest one-day performance in 10-1/2 months, which lifted the common currency to a 5-1/2-month high.
Growing appetite for risk meant safe-haven assets fell out of favour, with U.S. 10-year Treasury yields firming to 2.34 percent from 2.23 percent on Friday.
U.S. crude futures slipped after a volatile overnight session following an industry report showed a surprise build-up in inventories. U.S. crude futures were down 0.7 percent at $49.24 a barrel.