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Asian shares hit new highs on U.S. rate cut hopes


MSCI’s broadest index of Asia-Pacific shares outside Japan hit a two-year high

Asian share markets hit new highs on Friday as investors sized up U.S. rate cuts for September and the mood was upbeat, while the euro reached a three-week high ahead of French elections.

Sterling was firm at $1.2762 as Britain’s Labour Party was set for a landslide poll victory that will sweep it to power after 14 years of Conservative rule. Elsewhere, the dollar was marginally weaker and Treasury yields slightly higher in Tokyo, as trade resumed after the U.S. Independence Day holiday.

Japan’s Nikkei and broader Topix both rose to record levels, as did Taiwan’s benchmark, before pulling back marginally.

MSCI’s broadest index of Asia-Pacific shares outside Japan hit a two-year high with Samsung’s estimate of a more than 15-fold increase in second-quarter profit helping South Korea’s KOSPI to a two-year high as well.

Singapore’s bank and property heavy Straits Times index pulled back after sharp gains lifted it to a two-year high.

Global liquidity remains flush and with the S&P 500 printing a ridiculous number of records these days, at some point valuations elsewhere will make a compelling enough case, according to Vishnu Varathan, chief economist at Mizuho in Singapore.

He noted AI demand had driven chipmaker rallies in Taiwan and South Korea, that interest-rate settings were fuelling record profits for Singapore’s big banks and that a weak yen had been a tailwind for Japanese equities.

Japanese household spending unexpectedly dropped in May, government data showed on Friday, complicating the interest rate outlook especially as one of the factors behind the decline has been how the soft yen has curbed consumers’ purchasing power.

The yen increased marginally to 160.75 per dollar. FTSE futures rose 0.2% on Friday and S&P 500 futures were up ever so marginally to suggest a new record for the cash index may be in store later in the day.

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