Asia heartened by Wall Street high, dollar in demand
By Wayne Cole and dn
SYDNEY (Reuters) - Asian markets should be well underpinned on Tuesday after Wall Street closed at historic highs while oil prices suffered a vicious setback after Saudi Arabia quashed all thought of cutting supply.
The revival in risk appetites undermined the safe haven yen and kept the U.S. dollar elevated across the board, while sovereign bonds were content to consolidate recent gains.
Equity investors chose to focus on the benefits that falling fuel prices would have for consumer spending power.
"Overall, we see this as a shot in the arm for the global economy," Olivier Blanchard, chief economist at the IMF, and Rabah Arezki, head of the commodities research team, wrote in their blog on Monday.
They estimated the boost to world growth would be between 0.3 and 0.7 percentage points above the Fund's baseline forecast of 3.8 percent, with the gain to China ranging from 0.4 to 0.7 percentage points.
Trading was thin in Asia with Japanese markets closed for a holiday. Australian stocks ran into profit-taking after three sessions of sharp gains and dipped 0.2 percent .AXJO.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was likewise off 0.1 percent.
On Wall Street, the S&P 500 .SPX put on 0.38 percent to an all-time closing high, while the Dow .DJI added 0.87 percent and the Nasdaq .IXIC 0.34 percent. Continued...