Asia stocks are mostly higher as they take impetus from the post-election rally seen on Wall St where all majors gained at least 2% and the DJIA notched more than a 500-point gain as investors ploughed back into stocks after the US mid-terms results conformed to the broad consensus. ASX 200 (+0.5%) and Nikkei 225 (+2.0%) gained from the open with tech outperforming in Australia after a similar strong performance of the sector in US, while Japanese sentiment and exporters are boosted by a weaker currency. Elsewhere, Hang Seng (+0.9%) and Shanghai Comp. (+0.4%) also benefit from the heightened global risk appetite but with continued PBoC liquidity inaction and looming Chinese trade data capping upside in the mainland.
FX markets have calmed overnight with the greenback holding above the 96.00 level after the prior day’s post-election rebound, while its major counterparts EUR/USD and GBP/USD have drifted sideways at the 1.1400 and 1.3100 handles respectively. Elsewhere, USD/JPY and JPY-crosses marginally extend on recent gains as the rally in stocks dampen demand for safe-haven JPY, while antipodeans are rangebound with AUD tentative ahead of the latest China trade data and with NZD lacking direction following an unsurprising RBNZ policy announcement in which it maintained rates as expected at 1.75% and kept the option of a future rate cut on the table.
Finally, 10yr JGBs track the losses in USTs as the rampant tone in equities weigh on safe-havens and with participants also sidelined ahead of an enhanced liquidity auction for 2yr-20yr JGBs.