Asian shares scaled their highest levels since August 2011 on Wednesday after an improving global economic outlook whetted investor appetite for risk, while the yen firmed amid doubts over Japan’s commitment to drastic reflation.
Asian shares have been on an uptrend as risks from the euro zone debt crisis and the U.S. fiscal impasse abated and signs of recovery emerged in major economies including China. Corporate earnings have also been generally positive.
“The tide continued to push higher for equity markets across Asia today, with solid leads from Europe and the U.S. enough to keep traders in a buying frame of mind,” said Tim Waterer, senior trader at CMC Markets.
News of new possible mergers boosted U.S. stocks on Tuesday, pinning the benchmark Standard & Poor’s 500 Index .SPX near a five-year high, while European shares rose after the German ZEW investor sentiment index rose to a three-year high.
European markets will likely consolidate, with financial spreadbetters predicting London’s FTSE 100 .FTSE, Paris’s CAC-40 .FCHI and Frankfurt’s DAX .GDAXI would open down 0.1 percent. U.S. stock futures were flat to suggest a subdued start for Wall Street. .L.EU .N
The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.8 percent, up for a third day in a row, led by a 1.9 percent gain in its technology sector .MIAPJIT00PUS. The index has risen 4.3 percent year to date.
South Korean shares .KS11 outperformed their peers with a 1.8 percent jump to a one-month high, as foreigners stepped up buying and a pause in the yen’s falling trend soothed sentiment.
Australian shares .AXJO rose 0.3 percent, extending their bull run at 4-1/2-year highs on improving sentiment overseas and a better-than-expected domestic earnings season. The Australian market has risen nearly 10 percent this year.
Positive growth in Southeast Asia has drawn foreign investors, keeping regional stocks robust. The Philippines stock market .PSI extended gains to a record high while Bangkok’s SET index .SETI hit a fresh 18-year high.
Rallying stocks weighed on assets perceived as safe-haven, with spot gold inching up 0.2 percent to $1,606.84 an ounce but stuck near a six-month low.
Asian credit markets took their cues from stocks, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by two basis points.
London copper edged up 0.2 percent to $8,067.75 a metric ton, off Tuesday’s three-week lows.
“A shift to cyclicals from defensives has come full circle and investors are now looking at sector-specific factors within an asset class, selecting those with a tight supply/demand outlook,” said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory.
He said industrial metals and oil are favored by investors. Within base metals, copper will likely rise further as economic activity increases, as will Brent crude oil, while U.S. crude was seen weighed by ample supply.
U.S. crude steadied around $96.72 a barrel but Brent eased 0.2 percent to $117.31.
Platinum and palladium also have further upside scope due to supply concerns.
The rise in equities weighed on assets perceived as safe-haven, such U.S. Treasuries and gold on Tuesday. Spot gold inched up 0.2 percent to $1,607.94 an ounce, but hovered near a six-month low hit the day before.
