GLOBAL MARKETS-Aussie shares hit 5-yr high, dollar near 8-mth low

Sun Oct 20, 2013 7:34pm EDT

* Australian shares rise 0.8 pct to 5-year peak
    * Asian shares tick higher to 5-month high
    * Dollar stays on back foot on expectations Fed to delay
taper

    By Dominic Lau
    TOKYO, Oct 21 (Reuters) - Australian shares climbed to a
five-year peak on Monday, taking cues from the U.S. S&P 500's
 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
programme 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 scaled a five-year peak, while
MSCI's broadest index of Asia-Pacific shares outside Japan
 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, signalling 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
 and Morgan Stanley.
    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.
    In terms of valuations, the S&P 500's 12-month forward
price-to-earnings ratio stood at 13.9, in line with its 10-year
average of 14 and slightly above the Nikkei's 13.5 and the
pan-European STOXX Euro 600 index's 12.7, data from
Thomson Reuters Datastream showed.
    The dollar index, which tracks the greenback against
a basket of major currencies, was at 79.637 on Monday, not far
from an eight-month low of 79.478 touched on Friday.
    The dollar was steady at $1.3682 to the euro after
hitting an eight-month low at $1.3704 in the previous session,
and down a touch at 97.86 yen.     
    Barclays Capital analysts said a strong reading in the U.S.
jobs data would likely pare back the expectations of the Fed
delaying tapering, which would lead to a rally in the dollar.
    "We forecast nonfarm payrolls to increase by 200,000 and the
unemployment rate to decline to 7.2 percent. Results in line
with our forecast would likely lead to a broad U.S. dollar
rally, as expectations for a taper delay are pared back," they
wrote in a note.
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