World markets advance as US shutdown ends

Photo: AP

Published Tuesday, January 23, 2018

By AFP

Asian and European stock markets pushed higher Tuesday on investor relief over the end of the US government shutdown, dealers said.

"A resolution to the US government shutdown has helped boost Asian and European indices," said IG analyst Joshua Mahony.

"However, with a short-term solution in place, we will be back in the same position in weeks."

Democrats on Monday agreed to a Republican deal that brought an end to the three-day federal shutdown - the first since 2013.

The agreement, which keeps the government running until February 8, gave an extra nudge to Wall Street's three main indexes, which all set new records by the end of trade.

Stephen Innes, head of Asia-Pacific trading at OANDA, added that the deal was "a matter of kicking the can down the road".

Europe's major bourses gained ground after Asia extended a new year rally on ongoing optimism about the upcoming earnings season.

Frankfurt was aided also by a key survey which showed surging German investor confidence in January.

The ZEW institute's monthly index of financial players' economic expectations added 3.0 points to 20.4, a much sharper gain than the 0.5-point increase that was forecast by analysts.

Still, equity markets remain upbeat, having surged in recent weeks on the back of a strong global economy, hopes for strong corporate profits and expectations of a positive hit from Donald Trump's tax cuts.

Sentiment was bolstered by a report from the International Monetary Fund raising its world growth outlook and predicting at least a short-term boost from the president's fiscal policy.

Strong yen fear

On Tuesday, Hong Kong continued to hit new records, surging 1.7 percent, while Tokyo finished 1.3 percent up at a 26-year high.

Shanghai soared 1.3 percent and Seoul jumped 1.4 percent.

The yen edged down against the dollar after the Bank of Japan offered no new guidance on its plans for monetary policy after earlier this month easing back on its bond-buying stimulus.

While no moves were expected from the central bank, there had been hopes the board would provide some forward guidance as it edges away from its easy-money crisis-era policies to move in line with the Federal Reserve.

However, the dollar is struggling to bounce back against the euro as the European Central Bank considers its own tightening, while Germany is on course to end months of uncertainty and form a new government.

Key figures around 1130 GMT

London - FTSE 100: UP 0.2 percent at 7,731.15 points

Frankfurt - DAX 30: UP 0.7 percent at 13,561.10

Paris - CAC 40: UP 0.1 percent at 5,546.09

EURO STOXX 50: UP 0.3 percent at 3,676.43

Tokyo - Nikkei 225: UP 1.3 percent at 24,124.15 (close)

Hong Kong - Hang Seng: UP 1.7 percent at 32,930.70 (close)

Shanghai - Composite: UP 1.3 percent at 3,546.50 (close)

New York - DOW: UP 0.6 percent at 26,214.60 (close)

Euro/dollar: DOWN at $1.2252 from $1.2263 at 2200 GMT

Pound/dollar: DOWN at $1.3954 from $1.3987

Dollar/yen: DOWN at 110.67 yen from 110.92 yen