Asian equity markets have taken their lead from both the European and US markets, with risk-on sentiment rolling over into today’s morning session, thanks to positive commentary from US house speaker Boehner in the US session, who said he was confident that a deal on the so-called ‘fiscal cliff’ can be reached to avert large tax hikes and spending cuts. Moreover, president Obama is also optimistic that the Republicans and Democrats can reach a compromise by the end of the year.
Decent gains are observed in ASX 200, recouping some of the losses seen in yesterday’s session. In terms of data, the release of the lower-than-previous Australian Capex estimate for 2012/13 has translated in a weakening AUD across the board, with AUD/USD immediately spiking down 14 pips. This disappointing estimate somewhat increases the chance of a RBA rate cut at their decision on December 6th, with the implied chance of such a movement priced into the overnight index swap rising from 63% to 71%. Of note, survey analysts are expecting a cut of 25bps. Pre-market, we did hear from RBA watcher McCrann who said rate cut is likely next week.
Elsewhere, the Shanghai Composite finally opened in positive territory for the first time in over 6 days, supported by positive sentiment from the US. Meanwhile, a solid gain in Hang Seng was seen in the early trade, up 0.5% at open, aided by technology and basic materials sectors.
Looking forward, there are no more economic releases scheduled for today. But do note, we will see annualized GDP (Q/Q) due at 1330GMT/0730CST in the following US session.
As of 0253GMT:
ASX200 (+0.44%), Nikkei 225 (+0.66%), Shanghai Comp. (+0.02%), Hang Seng (+0.45%), KOSPI (+0.89%)
29 Nov 2012 - 11:01 - - Source: Newswires
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