Stocks in Asia and other parts of the world continued to rally following corporate results and anticipation of tax reform in the US.
Stock Rally Continues Amid Global Growth Optimism
Optimism over global growth saw a weak yen lifting equities for the fifth consecutive day in Japan.
The Asia Pacific MSCI index rallied to its highest since mid-2015 following strong earnings from gainers including McDonald’s Corp, Caterpillar Inc. among others.
Stocks in emerging markets also rose to their highest in two years with the Malaysian ringgit and Taiwan dollar leading in currency gains. The Aussie however dropped after inflation failed to attain anticipated estimates. The yen also continued on a losing streak as gold held declines.
Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors said, “Confidence has returned and the yen has fallen to gain more value.”
He added, “Markets seem a lot more relaxed and globally there is a large appetite for risk.”
As European political risk minimized, global equities rallied to a historical high this month. Improvement in the US economy in which earnings results are better than expected have also helped the global rally.
US President Donald Trump is set to announce a tax plan on Wednesday that will serve to reduce the upper corporate rate to 15 percent.
There are still risks as investors wait for central bank meetings in Europe and Japan this week. Meanwhile, in China there are worries over a crackdown from regulators, which has seen the second largest stock market in the world trade at a four month low. There is also mounting tension around North Korea.
Investors are watching key events. Top tech companies including Alphabet Inc., Amazon.com Inc., Microsoft Corp., Intel Corp., and Twitter Inc., and others in the financial sectors including Barclays Plc., Total SA and Bayer AG are set to announce their results this week.
A second key event is the decision by the Bank of Japan over the country’s monetary easing policy. It is expected that the policy will remain intact following a two-day meeting starting Thursday. Investors are watching the inflation, which is still lower than the central bank target of 2 percent but is showing signs of increasing.
Third, the European Central Banks will set its monetary policy on Thursday. Officials have suggested the policy will largely remain unchanged and as such, investors will focus on signals on whether the European Central Bank is looking to move away from its stimulus.
Lastly, the US GDP is set to be announced later in the week. It is expected that the data will show that the economy grew at a 1 percent rate annually in the first quarter, the weakest growth in a year.