Asian stocks hit record high, as earnings, stimulus boost recovery hopes

TOKYO/NEW YORK: Asian stocks hit a record high on Wednesday, as upbeat earnings, hopes of a large U.S. fiscal stimulus and progress in vaccinations fanned optimism about a global recovery from the pandemic.

MSCI's ex-Japan Asian shares index rose 0.8per cent, rising above its January peak to reach its highest level ever.

In mainland China's CSI300 rose 1.3per cent to a 13-year high and the Shanghai Composite hit a five-year high on the last trading day before the week-long Lunar New Year holidays.

Japan's Nikkei eked out gains of 0.1per cent while e-mini futures for the U.S. S&P 500 rose 0.35per cent.

Corporate earnings have been beating expectations in many places including the United States and Japan.

In the latest example, shares of Lyft Inc rose as much as 11.8per cent while Twitter Inc climbed 3.5per cent in aftermarket trading on their latest quarterly results.

"Globally investors are raising weightings on stocks as the Biden administration looks set to spend pretty much close US$1.9 trillion on its stimulus," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Although U.S. President Joe Biden's stimulus package faces opposition from Republicans, his fellow Democrats last week approved a budget outline that will allow them to muscle the stimulus through in the coming weeks without Republican support.

On Wall Street, major stock indexes closed little changed on Tuesday, though the tech-heavy Nasdaq Composite eked out a record high on a gain of 0.14per cent. The S&P 500 lost 0.11per cent.

The S&P had climbed the previous six sessions and is up 5.3per cent for the month, underpinned by the prospects of the large U.S. relief package.

The yield on the benchmark U.S. 10-year Treasury notes was last at 1.16per cent, not far off Monday's 10 1/2-month high of 1.20per cent.

Higher bond yields also reflect rising inflation expectations, with break-even inflation calculated from inflation-protected Treasuries rising to 2.20 percent, the highest since 2014.

The Fed has said it would tolerate inflation rising beyond 2per cent temporarily.

U.S. inflation data, due later on Wednesday, is expected to show an annual rise of 1.5per cent in core CPI.

In the currency market, the dollar traded near two-week lows against a basket of currencies after sizable fall in the previous trade.

The dollar traded at 104.55 yen after 0.64per cent fall on Tuesday, its biggest in three months, while the euro changed hands at US$1.2119, extending its rebound from a two-month low of US$1.1952 touched on Friday.

The British pound held firm at US$1.3822, hitting its highest level since April 2018.

The offshore Chinese yuan held firm at 6.4185 to the dollar, within sight of its 2 1/2-year high of 6.4119 set on Jan. 5.

Bitcoin, which gained 19.5per cent on Monday, stood little changed at US$46,292, not far off its record high of US$48,216 set on Tuesday.

Ethereum, the second-most-popular cryptocurrency, hit a record high of US$1,826.

Spot gold added 0.3per cent to US$1,842.8 an ounce after rising to a one-week high on Tuesday.

Brent oil held firm at US$61.03 per barrel, near 13-month highs after a seven-day winning streak as investors are betting that fuel demand will rise while OPEC and allied producers keep a lid on supply.

"With Brent over US$60, it's been great psychologically," said John Kilduff, partner at Again Capital LLC in New York. "Everyone is feeling bullish about stronger demand and global inventories in further decline."

(Reporting by David Henry in New York, Hideyuki Sano in Tokyo; Editing by Sam Holmes and Gerry Doyle)