Asian equities were mostly firmer on Wednesday after a strong Wall Street session in which the S&P 500 hit an all-time high, rebounding from huge losses caused by the coronavirus pandemic.
Both the S&P 500 and Nasdaq Composite set records soon after the opening bell following strong sales growth reported by major U.S. retailers including Walmart, Kohl’s and Home Depot.
The closely-watched S&P 500 topped an all-time peak reached in February just before the onset of the COVID-19 pandemic drove the benchmark index to lows on March 23. The index has surged about 55% since then.
Market optimism was also buoyed by data showing an acceleration in U.S. homebuilding to the most in nearly four years in July, signifying that the housing sector is emerging as one of the few areas of strength in an economy hit hard by the pandemic.
“There was just this big focus on Home Deport doing great, Walmart doing ok, Amazon adding jobs,” said Hilary Kramer, chief investment officer at Kramer Capital Research.
“What analysts didn’t realise was that people were indoors and did upgrades to their homes, combine that with bad weather and people needing to buy things to stay at home - and they all will still be at home.”
Australia’s S&P/ASX 200 rose 0.1% in early trade while South Korea’s Kospi was up 1.0%. Japan’s Nikkei 225 slipped 0.2%.
Nasdaq clocked its 18th record closing high since early June, when it confirmed its recovery from the coronavirus sell-off. Tuesday’s record was its 34th record close so far this year compared with 31 record closing highs in 2019 and 29 in 2018.
Consumer discretionary rose the most among major S&P sectors on strength in Amazon while technology stocks provided another major support to the benchmark index.
“We have this phenomenon where tech stocks and even Tesla are just going up and while the rest of the market remains fairly valued,” Kramer said.
The U.S. Federal Reserve’s intervention in financial markets to maintain liquidity in the midst of the coronavirus pandemic has weakened the dollar, pushed risk assets to all-time highs and reduced demand for safe-havens.
Minutes from the Fed’s recent meeting due on Wednesday, meanwhile, may provide some insight into how the central bank sees the recovery playing out. The Fed has cut rates to near zero to bolster business through the pandemic.
The dollar index fell 0.551%, with the euro up 0.53% to $1.1932. The Japanese yen strengthened 0.60% versus the greenback to 105.38 per dollar.
U.S. Treasury yields slid as the market largely snubbed the strong housing data and looked for signs that a political stalemate in Washington over a round of aid was easing.
The benchmark 10-year Treasury note fell 1.8 basis points to yield 0.6655%.
Gold rose more than 1% to be back above the $2,000 level breached earlier this month, as the dollar fell against a basket of major currencies for a fifth consecutive trading day.Spot gold prices rose 0.74% to $2,000.19 an ounce. U.S. gold futures settled up 0.7% at $2,013.10.