Tokyo: Asian stocks edged up early on Wednesday after Wall Street indexes notched record highs, while the dollar was steady as investors awaited the Federal Reserve’s policy decision later in the day for more clues on its tightening plans.
The Fed concludes a two-day meeting later on Wednesday, and is widely expected to keep interest rates unchanged.
With a rate hike not in the picture this time, the focus will be on the Fed’s statement, with markets looking for signs of when the central bank will begin paring its massive bond holdings and next raise rates. A statement is expected at 1800 GMT.
“The stock markets are generally of a view that the Fed is not in too much of a hurry to normalise monetary policy. So equities would be able to take this Fed meeting in stride if the Fed’s statement is in line with such views,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
A more assertive policy message by the Fed, on the other hand, was expected to lift U.S. yields and boost the dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan, rose 0.1 percent, drawing support after the S&P 500 climbed to an all-time high overnight on well-received results from McDonald’s and Caterpillar in addition to bank share gains.
Caterpillar’s results smashed expectations and the company raised its full-year forecast for the second time, underscoring strength across its businesses and a steady recovery in demand from China.
South Korea’s KOSPI stood little changed and Australian stocks rose 0.9 percent as investors awaited inflation data. Price pressures are expected to remain mild, which would add to views that rates will remain at record lows for some time to come.
Japan’s Nikkei added 0.8 percent after the dollar extended an overnight rally against the yen to pull away from seven-week lows.
The U.S. currency was last traded at 111.980 yen for a gain of 0.1 percent.
The greenback was lifted as investors gained some hope that President Donald Trump could push through his expansionary fiscal agenda, after the Senate passed a motion to proceed on a repeal of Obamacare, which Trump and Republicans have vowed to undo.
The dollar also received support from a rise in U.S. Treasury yields. Long-dated Treasury yields jumped by the most in almost five months on Tuesday as Wall Street hit new highs and on reduced demand for safe-haven bonds.
The euro was 0.1 percent lower at $1.1638, pulling back from a two-year high of $1.1712 hit on Tuesday on a stronger-than-expected German Ifo business survey.
Expectations that the European Central Bank would begin phasing out its easy monetary policy sooner rather than later have supported the common currency this month.
The dollar index against a basket of major currencies was 0.1 percent higher at 94.144, managing to put some distance between a 13-month low of 93.638 plumbed on Tuesday.
U.S. political uncertainty has recently hurt the dollar, with the Trump administration dogged by investigations into alleged Russian meddling in the U.S. election.
In commodities, crude oil extended its surge after jumping overnight on data showing a sharp fall in U.S. crude stocks last week.
U.S. crude rose 1 percent to $48.36 a barrel and Brent added 0.7 percent to $50.56 a barrel.
Gold struggled as improved investor risk appetite in the broader markets curbed the precious metal’s appeal. Spot gold was 0.1 percent lower at $1,247.25 an ounce following its ascent to a one-month peak of $1,258.79 on Monday.
Indian shares edged higher on Wednesday tracking mixed cues from global markets. The Sensex rose nearly 50 points to 32,277.85 while the Nifty50 index added over 20 points to 9,986.90. Metal stocks were the prominent gainer in the market with the Nifty Metal sub-index of NSE rising 0.90 per cent. Vedanta, Tata Steel were the top two gainers in Nifty rising 2.13 per cent and 1.07 per cent respectively. BPCL, Eicher Motors, Mahindra & Mahindra were the other prominent gainers in the Nifty.
Meanwhile, Axis Bank was the top loser in Nifty, down 1.11 per cent followed by Asian Paints and Bharti Infratel, which fell 1.07 per cent and 1.03 per cent respectively. Axis Bank yesterday reported a smaller-than-expected 16 per cent drop in quarterly profit at Rs. 1,306 crore, beating analysts’ estimate(Reuters’ average analyst’s estimate) of Rs. 1,282 crore.
It also said that outstanding loans on its “watch list”, or potential troubled loans that risk turning sour, fell 16 per cent from the previous quarter to Rs. 7,941 crore as of end-June.
Bharti Airtel, which also reported its June quarter earnings post market hours on Tuesday, was down 0.3 per cent. India’s biggest telecom operator said its consolidated profit fell 75 per cent to Rs. 367 crore in the three months to June 30.
The pricing disruption in the Indian telecom market caused by the entry of a new operator has led to industry revenue declines and created further stress on sector profitability, cash flows and leverage, said Gopal Vittal, MD and CEO, India & South Asia, said in a company statement.
However, Bharti Airtel’s profit, the lowest since December 2012, came in above analyst estimates of Rs. 335 crore, according to Thomson Reuters data.
As of 9:37 am, Nifty was up 14.45 points at 9,979 and the BSE benchmark, Sensex traded 45.77 points higher at 32,274.04.
Elsewhere, other Asian shares traded mixed. Nikkei was up 0.51 per cent, Hang Seng rose 0.06 per cent while China’s Shanghai Composite fell 0.37 per cent. Overnight, US stock indices hit record high on the back of gains in banking shares and positive earnings from McDonald’s and Caterpillar.
The Dow Jones Industrial Average rose 100.26 points, or 0.47 per cent, to 21,613.43, the S&P 500 gained 0.29 per cent, to 2,477.08 and the Nasdaq Composite added 1.37 points to 6,412.17.
The NSE Nifty rose nearly 40 points to hit the 10,000 mark it breached for the first time in the previous session, with stocks such as Vedanta and Reliance Industries gaining on solid quarterly results. Meanwhile, the BSE Sensex gained over 100 points to hit an intraday high of 32,333. Expectations of a better earnings season with improving economic indicators have increased investor confidence, extending a record-setting rally this year, although high valuations are seen capping gains in the near term.
The Nifty has hit a string of record highs this year and is Asia’s third best-performing index this year with a 22 percent gain.
“The market is on a secular uptrend. Among other factors, corporate results so far have been fairly decent with upbeat performances,” said Nitasha Shankar, senior vice president and head of research at Yes Securities (I) Ltd.
“Overall, things are improving and we expect the market to continue on this journey upward, though there will be some days of profit booking which would only be prudent.”
As of 12.23 pm, the Nifty was up 0.37 per cent at 10,001.75 and the benchmark Sensex was 103 points or 0.32 per cent higher at 32,311.1 after hitting a fresh high on Tuesday.
Among gainers, shares of Vedanta rose as much as 3.3 per cent to their highest since September 25, 2014, after better margins from zinc operations helped double the company’s June-quarter consolidated profit. Meanwhile, Reliance industries, added nearly 1.6 per cent to hit a fresh 52-week high of Rs. 1,629.90.
Axis Bank fell as much as 2.7 per cent and was among the top percentage losers on the NSE index. Analysts say concerns over the banks’ unrecognised stress in power and others sectors linger. Axis posted a 16 per cent fall in quarterly profit on Tuesday, but said overall bad loans were stable.
Mumbai: On Tuesday, the National Stock Exchange of India’s benchmark Nifty 50 index opened above 10,000 points, the first time it breached that mark. The gauge has since retreated and was trading at 9,969 point as of 10:20am.
Here are five charts that recap the Nifty’s journey to 10,000.
Chart 1: How many days has it taken?
The climb from 9,000 to 1,000, an 11% gain, took 875 days. That’s the most, barring the journey from 1,000 to 2,000 points, which took almost a decade and a similar time from 6,000 to 7,000 points.
In the current rally, the index climbed beyond 9,000 points on 10 March this year. The overall markets since then have been boosted by the jump in real estate and financial services stocks. Pharma, IT and public sector stocks have been the biggest losers in this period.
Among the Nifty 50 stocks themselves, Indiabulls Housing Finance has led the rally with a near 38% rise. Consumer stock favourites such as Hindustan Unilever Ltd and Maruti Suzuki India Ltd are also among the top five gainers. Lupin was the worst performing Nifty stock during this period.
The rise in Indian equities has been fuelled by consistent buying from domestic and foreign institutions. So far this year, local mutual funds and insurance companies have bought Rs24,000 crore worth of stocks, while foreign funds have purchased around $8.5 billion.
The rise in stocks has not been matched by an increase in earnings expectations. Thus, valuations measured by the price to 1-year forward earnings yardstick have also climbed making the Nifty one of the most expensive indices in the world.