Asian shares jumped to an 18-month high on Friday while gold and oil prices stayed buoyant in a holiday-shortened week, following another record-setting rally on Wall Street.
On Thursday, the Nasdaq index rose above the 9,000-point mark for the first time as all three major Wall Street indexes posted record closing highs, boosted by optimism over United States-China trade relations and gains in shares of Amazon.com after a report signalled robust online holiday sales.
Traders returned from their Christmas and Boxing Day breaks to digest comments from Beijing that it was in close contact with Washington about an initial trade agreement, shortly after US President Donald Trump talked up a signing ceremony for the recently struck Phase 1 trade deal.
MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.55 percent to 555.25, a level not seen since mid-2018. It is up about 16 percent so far this year.
Japan’s Nikkei was flat, but on track for a near 20 percent rise this year, the biggest annual increase since 2013.
The country’s industrial output slipped for a second straight month in November in another sign the economy is cooling. Japan has approved a record budget for the coming fiscal year, in a bid to shore up growth.
Australia‘s benchmark index rose 0.2 percent while Chinese shares were upbeat after Beijing laid out additional plans to bolster its economy, including infrastructure investments. The blue-chip CSI300 added 0.56 percent.
The rally in global share indices is in sharp contrast to a plunge late last year when fears about the effect of the Sino-American trade war had sapped investor confidence.
The worries scuttled capital expenditure plans over much of 2019, but strong employment and signs of an improving global economy suggest that will change next year.
The US Federal Reserve’s policy easing, economic data that has come in above expectations, and strong corporate profits have helped lift stocks this year along with trade-related optimism.
“A lot of robust sentiment toward the end of 2019 – but we need to see that translate into the underlying real economy going into 2020,” Ann Berry, a partner at Cornell Capital LLC, said on Bloomberg TV. “It’s astonishing that you’ve had a period of rate cuts that we have seen, and yet that investment in capital goods has not gone up in the way that you’d expect.”
Market participants are now waiting for fourth-quarter earnings in January for indications as to whether sentiment among corporates has actually improved.
Overnight, MSCI’s all-country world index and Wall Street’s Dow Industrials, the benchmark S&P 500 and the technology-rich Nasdaq all closed at record highs.
MSCI’s gauge of stocks across the globe gained 0.38 percent to a record, on track for its best year since 2009. The index has gained 24 percent this year.
Wall Street was boosted overnight by US-China trade optimism and gains in Amazon.com.
Amazon shares jumped 4.4 percent after Mastercard said US shoppers spent more online during the holiday season than in 2018, with e-commerce sales hitting a record.
Both oil and gold held on to their recent gains.
Brent crude, the global benchmark, extended gains into a fourth session, hitting $68.09 per barrel, the highest since mid-September. US West Texas Intermediate crude gained 14 cents to $61.82 a barrel.
Brent has rallied about 25 percent in 2019, supported by supply cuts by OPEC and allies including Russia.
Gold prices were a bit shy of a two-month high at $1,509.29 an ounce. They have been on the rise recently as a hedge against dollar weakness and increased equity market volatility in 2020.
The rally in oil and gold boosted commodity-linked currencies with the New Zealand dollar up 0.6 percent and the Australian dollar up 0.3 percent.
The US dollar was slightly weaker against the Japanese yen at 109.47.