Aussie shares hit five-year high, dollar near eight-month low

Sun Oct 20, 2013 7:37pm EDT
 
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By Dominic Lau

TOKYO (Reuters) - Australian shares climbed to a five-year peak on Monday, taking cues from the U.S. S&P 500's .SPX record high as investors bet the Federal Reserve will extend its cheap money policies into next year.

The change in expectations followed a 16-day shutdown of the U.S. government that could cloud the economic outlook and make the Fed wary to scale back its $85 billion a month bond-buying program this year as many had expected. This kept the dollar on the back foot.

Investors face a deluge of U.S. data this week as government departments reopen, with the September nonfarm payrolls report due on Tuesday.

"Such strong readings would again ignite a debate on an imminent start of U.S. tapering, but given that the full impact of the recent shutdown may take some further time to emerge, we continue to see tapering in first quarter next year," analysts at Societe Generale wrote in a note.

Australian shares .AXJO scaled a five-year peak, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.2 percent to a five-month high.

U.S. S&P 500 E-mini futures added 0.1 percent in early Asian trade on Monday, signaling a further rise for the market if the gains are maintained through the day.

The benchmark S&P 500 U.S. index rose 0.7 percent on Friday to close at a record high for the second straight day, capping its biggest weekly gain in three months on stronger-than-expected earnings from the likes of Google (GOOG.O: Quote) and Morgan Stanley (MS.N: Quote).

Of the 98 S&P 500 companies that have so far reported third-quarter earnings, two-thirds either beat or met market expectations, according to Thomson Reuters StarMine.   Continued...

 
Specialist trader Chris Malloy (C) gives a price to traders on the floor of the New York Stock Exchange, October 18, 2013. REUTERS/Brendan McDermid