Asian stocks joined a global relief rally as investors switched their focus back to the outlook for US monetary policy following the defeat of Italy’s constitutional referendum.
Bonds and crude oil retreated. Mining and consumer shares led the Asian equity benchmark higher after the Dow Jones Industrial Average’s return to a record. The won strengthened for the first time in three days, and the euro was near its strongest level since mid-November after wiping out an initial slump Monday on the Italian premier’s resignation.
Oil snapped
Australia’s bonds fell with debt in the region as the nation’s central bank held its benchmark interest rate at a Tuesday meeting. Oil snapped a four-day climb. Traders – burned by the shock Brexit vote and Donald Trump’s surprise victory – correctly anticipated Italy’s rejection of Senate reform, helping contain the financial market fallout.
Investors are pivoting back to the US, with the Federal Reserve’s policy review just over a week away and data bolstering confidence in the world’s largest economy. American services industries grew at the fastest pace in 13 months in November, a report Monday showed, further embedding bets on the Fed hiking rates. “Investors shrugged off the anti-establishment messages from the Italian referendum to drive share prices higher,” said Michael McCarthy, chief market strategist in Sydney at CMC Markets. “Attention now turns to the Fed’s interest-rate decision next week, the last listed major risk event for the year.”
Bloomberg
