Asian shares higher on Obama stimulus plan

Financial Times:

 Asian shares are mostly higher as investors are cheered by US President Barack Obama’s $50bn stimulus plan while the stronger yen weighs on Japanese stocks.

The MSCI Asia Pacific Index is up 0.1 per cent after rallying 4.6 per cent in the past four days amid optimism that the global economy will not slip into a double-dip recession.

Steelmakers are gaining ground on expectations that Mr Obama’s stimulus measures will boost economic growth and after China on Monday announced it was shutting down steel mills in Hebei province, a large steel-producing area. Posco, the world’s third-largest steelmaker, is up 4.7 per cent in Seoul on strong foreign buying while JFE has risen 4.1 percent in Tokyo

Mr Obama, who announced the plan ahead of the November mid-term elections, aims to spend $50bn on building roads, railways and airport runways next year to tackle the US’s unemployment problem.

His announcement comes after Friday’s forecast-beating US labour report, which in turn followed well received surveys on US and Chinese manufacturing. The bullish news flow has helped provide equities with a pop in the wake of a miserable August.

Some analysts, however, have already begun questioning the ebullient reaction to the labour data, and others are noting a disappointing US service sector survey from last week.

In Japan, the yen is higher at Y84.13 against the dollar, up from Y84.22 in late New York trading. That is hitting the shares of exporters, with Nissan Motor down 1.2 per cent and Nintendo 0.7 per cent lower. The Nikkei 225 is off 0.2 per cent.

Currencies are otherwise relatively stable, though it is noticeable that forex cross trades most associated with risk aversion, such as euro/Swiss franc, are still flirting with record highs respectively.

In addition, highly rated sovereign debt is retaining its cachet as Bunds rally after last week’s sell-off.

Investors are keeping an eye on any move by the Bank of Japan as it ends its two-day policy meeting in the coming hours. The central bank is expected to keep monetary policy unchanged after announcing an easing at last week’s emergency meeting.

This kicks off a busy week for monetary and fiscal policy, with interest rate decisions from Reserve Bank of Australia later in the day; the Bank of Canada on Wednesday; and the Bank of England on Thursday.