US stocks opened at record highs yesterday after Japanese Prime Minister Shinzo Abe’s emphatic win in weekend polls, while US Treasury 30-year bond yields hit session lows.
The overwhelming election victory for Japan’s ruling party also sent the dollar to a three-month high against the yen, as investors bet the win would mean a continuation of “Abenomics,” the ultra-loose policies that have kept downward pressure on the yen.
The Japanese yen weakened 0.16 per cent versus the greenback at 113.71 per dollar.
Benchmark 10-year notes last rose 3/32 in price to yield 2.3719 per cent, from 2.381 per cent late on Friday.
The 30-year bond last rose 8/32 in price to yield 2.8809 per cent, from 2.894 per cent late on Friday.
Optimism about tax cuts in the United States on Friday had pushed Wall Street to a new record, with the Dow and S&P 500 closing at a record high each day of the week.
Yesterday, the Dow Jones Industrial Average rose 25.07 points, or 0.11 per cent, to 23,353.7, the S&P 500 lost 0.36 points, or 0.01 per cent, to 2,574.85, and the Nasdaq Composite dropped 14.60 points, or 0.22 per cent, to 6,614.45.
Corporate earnings had a strong start, with 73.2 per cent of the 97 S&P companies beating profit ex-pectations versus a 72 per cent beat rate over the last four quarters.
“For the first time in almost a decade, investors are paying close attention to what’s going on in the underlying drivers of the markets, and that’s earnings,” said Peter Donisanu, a research analyst for Wells Fargo Investment Institute.
“And earnings have been on the rebound globally, and they’ve been on the rebound globally as a result of the improving conditions in the global economy,” he said.
European STOXX 600 shares rose 0.22 per cent, although Madrid’s bourse IBEX lagged its peers, shedding 0.4 per cent.
Madrid took the unprecedented step of firing the government of Catalonia on Saturday in a last resort to thwart its push for independence. Catalan leaders called for civil disobedience in response.
The pan-European FTSEurofirst 300 index rose 0.19 per cent and MSCI’s gauge of stocks across the globe shed 0.05 per cent.
Japan’s Nikkei rose 1.11 per cent. Emerging market stocks lost 0.33 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.2 per cent lower.
Eurozone borrowing costs fell, as bond markets readied for the European Central Bank to signal baby steps away from its ultra-easy policy stance on Thursday and for the US Federal Reserve to hike rates in December.
Gold hit a more than two-week low. Spot gold dropped 0.4 per cent to $1,274.66 an ounce.
Oil prices largely held on to last week’s gains, supported by supply disruptions in Iraq and a drop in US drilling.
US crude rose 0.33 per cent to $52.01 per barrel and Brent was last at $57.65, down 0.17 per cent on the day.