eBusiness Weekly
TOKYO – Asian shares gained on Monday, joining a global recovery for equity markets as sentiment improved gradually from a recent shakeout that was sparked by fears of creeping inflation and higher borrowing costs.
Market prices are reflected in a glass window at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 6, 2018. REUTERS/Toru Hanai
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, having recovered more than 40 percent of its losses from late January to last week’s low.
Trading was slower than usual due to market holidays in the United States as well as Greater China.
Japan’s Nikkei gained 2.0 percent while U.S. stock futures climbed gained 0.4 percent in Asia on Monday.
European share are also seen rising, with spread-betters expecting advances of up to 0.8 percent in Germany’s Dax, 0.5 percent in France’s Cac and 0.2 percent in Britain’s FTSE.
MSCI’s index of stock markets across the globe gained 4.3 percent last week, the best weekly performance since December 2011.
The rebound came after a two-week rout that wiped off more than 10 percent of value at one point, triggered by worries a rise in U.S. inflation may boost dollar funding costs.
The sell-off took place even as the corporate earning outlook improved on the back of strong global growth, bringing down equity valuations off highs hit earlier this year.
Just before the market ructions in late January, world shares were traded at 16.66 times their expected earnings, the highest levels since 2004, according to Thomson Reuters Datastream. They are currently at 15.33 times.
“The stocks’ valuation has become cheaper to levels that are on par with the assumption that long-term U.S. bond yields will shoot up to 3.15-3.20 percent,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities. – Reuters
