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Victory for Abenomics lifts world stocks, dollar

October 23,2017 15:10

N225 climbed 1.1 percent to its highest since 1996, lifting the MSCI All-Country World index .MIWD00000PUS to a fresh record high. Also trading on Abe's big win, euro zone borrowing costs fell, as bond markets ready for the European Central Bank to ...

NEW YORK (Reuters) - U.S. stocks opened at record highs on Monday after Japanese Prime Minister Shinzo Abe’s emphatic win in weekend polls, while U.S. Treasury 30-year bond yields hit session lows.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, October 17, 2017. REUTERS/Staff/Remote
The overwhelming election victory for Japan’s ruling party also sent the dollar to a three-month high against the yen, as investors bet the win would mean a continuation of “Abenomics,” the ultra-loose policies that have kept downward pressure on the yen.
The Japanese yen weakened 0.16 percent versus the greenback at 113.71 per dollar.
Benchmark 10-year notes US10YT=RR last rose 3/32 in price to yield 2.3719 percent, from 2.381 percent late on Friday.
The 30-year bond US30YT=RR last rose 8/32 in price to yield 2.8809 percent, from 2.894 percent late on Friday.
Optimism about tax cuts in the United States on Friday had pushed Wall Street to a new record, with the Dow and S&P 500 closing at a record high each day of the week.
On Monday, the Dow Jones Industrial Average .DJI rose 25.07 points, or 0.11 percent, to 23,353.7, the S&P 500 .SPX lost 0.36 points, or 0.01 percent, to 2,574.85 and the Nasdaq Composite .IXIC dropped 14.60 points, or 0.22 percent, to 6,614.45.
Corporate earnings have got off to a strong start, with 73.2 percent of the 97 S&P companies beating profit expectations versus a 72-percent beat rate over the past four quarters.
“For the first time in almost a decade, investors are paying close attention to what’s going on in the underlying drivers of the markets, and that’s earnings,” said Peter Donisanu, a global research analyst for Wells Fargo Investment Institute.
“And earnings have been on the rebound globally, and they’ve been on the rebound globally as a result of the generally improving conditions in the global economy,” he said.
European STOXX 600 shares rose 0.22 percent, although Madrid's bourse IBEX .IBEX lagged its peers, shedding 0.4 percent, as Spain's crisis entered another week.
Madrid took the unprecedented step of firing the government of Catalonia on Saturday in a last resort to thwart its push for independence. Catalan leaders called for civil disobedience in response.
The pan-European FTSEurofirst 300 index .FTEU3 rose 0.19 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.05 percent.
Japan's Nikkei .N225 rose 1.11 percent. Emerging market stocks lost 0.33 percent. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.2 percent lower.
Argentina’s stocks, bonds and currency jumped on Monday as investors bet a strong electoral performance from President Mauricio Macri’s coalition could boost his reform agenda.
Argentina's benchmark Merval index .MERV rose 1.9 percent to new all-time highs, while the peso ARS=RASL firmed 0.9 percent. Dollar bonds jumped 1.8 percent ARDISCD=RASL.
Euro zone borrowing costs fell, as bond markets readied for the European Central Bank to signal baby steps away from its ultra-easy policy stance on Thursday and for the U.S. Federal Reserve to hike rates in December.
Gold XAU= hit a more than two-week low. Spot gold XAU= dropped 0.4 percent to $1,274.66 an ounce.
Oil prices largely held onto last week’s gains, supported by supply disruptions in Iraq and a drop in U.S. drilling.
U.S. crude CLcv1 rose 0.33 percent to $52.01 per barrel and Brent LCOcv1 was last at $57.65, down 0.17 percent on the day.
For graphic on global currencies vs. dollar, click: tmsnrt.rs/2kIQHol
For graphic on global bonds, click: tmsnrt.rs/2lmwqHC
For graphic on emerging markets in 2017, click: here

Additional reporting Sruthi Shankar in Bengaluru, Richard Leong in New York, and Jan Harvey and Georgina Prodhan in London

Our Standards:The Thomson Reuters Trust Principles.

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