Asian stocks edged up to another 10-month peak today after strong company earnings reassured investors that a US economic recovery is taking root, prompting a further shift into riskier assets from the safe-haven dollar.
European markets were set to open higher, with futures on the Dow Jones Eurostoxx 50 up 0.4 per cent.
Gains were kept in check as some market players booked profits on the run-up in equities and higher-yielding currencies, knocking the Australian dollar down from a five-week high against the US currency.
Central bankers are starting to sound a note of optimism as well. Minutes from the Reserve Bank of Australia's last meeting in July showed it had become more optimistic about the economic outlook at home and abroad.
But Federal Reserve Chairman Ben Bernanke reassured that loose monetary policy with interest rates near zero would be around for a while longer.
Writing in the Wall Street Journal,Mr Bernanke said the Fed's accommodative policy would be warranted for an extended period even while laying out a roadmap for how the Fed could mop up the massive reserves injected into the financial system.
Mr Bernanke delivers his twice-yearly testimony to Congress later in the day.
“It doesn't look like he's sounding too anxious or urgent about removing excess stimulus from the system,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney.
Stocks around the world have gained this month as major banks show more signs of healing from the credit crisis and companies are more confident about demand improving later this year and in 2010.
Analysts said the last-minute deal by CIT Group to secure emergency financing also boosted investor confidence, even as the drama surrounding the struggling US commercial lender has made few waves across markets.
“News of the CIT deal and positive economic data from the United States helped markets start off quite strong,” said Lee Sun-yeop, a market analyst at Goodmorning Shinhan Securities in Seoul. “Combined with a positive earnings outlook and growing upward momentum, we are seeing shares hitting a new high for the year.”
The MSCI index of Asia-Pacific shares outside Japan edged up 0.4 per cent after pushing up to 344.65 in early trade, the highest since late September when equity markets were crumbling after the collapse of US investment bank Lehman Brothers.
So far this year the MSCI benchmark for Asia has risen 39 per cent, rebounding from a record 53 per cent plunge last year and outperforming developed markets.
Equity indexes were mostly higher across the region. Hong Kong's Hang Seng inching up 0.2 per cent and South Korea's KOSPI adding 0.7 per cent, but the Shanghai Composite lost 0.7 per cent.
Reuters