Stocks in Asia were mostly higher with benchmark indexes in China and Japan hitting multiyear highs helped by a robust dollar as the dollar strengthened against a basket of foreign currencies.
“A stronger greenback has worked as a treat for Asian equities and seen the region get off to a positive start to the week. Gains for the greenback against the yen and Australian dollar have played a particularly big role [today],” IG’s Stan Shamu told CNBC business.
Shanghai’s benchmark Composite most recently gained 156.6 points or 3.35% at 4813.13 to extend its recent winning run. The SSE composite finished at a seven day high for the second straight session despite a slight decline in market sentiment on concerns over Greece’s economy.
The benchmark index has been helped in part by a recent wave of state funded infrastructure projects which has seen interest in equities grow.
In Japan, Asia’s second largest economy, equities rose for the 11th time in 12 sessions aided by a stronger dollar. The benchmark Nikkei Stock Average most recently jumped by a49.6 points or 0.7% to close at 20,413.77 points.
“Chinese stocks are certainly approaching full valuation levels, while Japanese shares are continuing to see value-based bids from offshore,” Chris McGuire, CEO at Phalanx Capital Management, a Chicago-based hedge fund with assets in China and Japan, told Market Watch.
“In either case, these markets are defying strong sell pressure. The only thing investors can do is either join the rally or get out of the way.”
Also aiding the rally in Japanese equities was government data showing that the country’s overseas shipments gained jumped 8% on a year on year basis. Market analysts were expecting a 6% rise.
The yen weakened against the dollar on better than expected inflation rate in the US and comments by the Federal Reserve Chairwoman Janet Yellen that a summer interest rate hike was still on the table.
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