* Risk sentiment bolstered as solid US retail data lifts
* Dollar rallies as yen retreats broadly, bond yields rise
By Wayne Cole
SYDNEY, Jan 15 Asian markets look set to gain on
Wednesday as surprising strength in U.S. consumer spending
reassured investors the world's largest economy was still on
track for growth, lifting the dollar and Wall Street.
A pullback in the yen will be particularly welcomed by
Japanese shares, which suffered their sharpest daily
drop in five months on Tuesday. Nikkei futures were
pointing to a sizable bounce at the open.
Australia made the early running with a bounce of 0.7
percent, having also fallen sharply on Tuesday. MSCI's
broadest index of Asia-Pacific shares outside Japan
was slowly inching higher.
The dollar bounced to 104.25 yen, leaving behind a
low of 103.00, after U.S. retail sales figures repaired the
damage done by last week's disappointing payrolls report.
While the headline measure of retail sales rose only a
modest 0.2 percent, a core measure favoured by analysts beat all
expectations with a jump of 0.7 percent.
The upbeat news was slightly tempered by downward revisions
to the previous month, but the data still pointed to healthy
consumer demand for the fourth quarter.
"Growth in final sales, particularly household consumption,
appears to have picked up sharply in Q4," said Barclays
economist Peter Newland. The bank lifted its forecasts for
economic growth in the quarter to an annualised 3.5 percent.
That, combined with a burst of merger activity and earnings
beats by Wells Fargo and JPMorgan, helped lift
the Dow 0.71 percent. The S&P 500 added 1.08
percent and the tech-laden Nasdaq jumped 1.69 percent.
The better economic news pushed 10-year U.S. Treasury yields
up 5 basis points to 2.87 percent, while slugging Eurodollar and Fed funds futures .
Price moves have been wild recently as the market tries to
second guess the speed of tapering by the Federal Reserve, and
when it might actually start raising interest rates.
Two of the most hawkish of Fed officials, Dallas Fed chief
Richard Fisher and Charles Plosser at the Philadelphia Fed, on
Tuesday advocated sticking with tapering.
The Euro Zone contributed to the flow of improving economic
news by reporting industrial output climbed 1.8 percent in
November, above forecasts and a positive for growth in the
That helped lift the euro 1.3 percent against the yen to
142.53 while keeping it stable on the U.S. dollar at
In commodity markets, a firmer dollar and rising equities
shoved gold back to $1,244.29 an ounce and off a high of
Oil prices were mixed with U.S. crude up 5 cents at
$92.64 a barrel as traders squared positions amid some signs of
strength in the U.S. economy.
In contrast, Brent fell 53 cents to $106.22 due to
incremental increases in Libyan oil supply and expectations that
Iranian crude will return to market.