(Bloomberg) -- Asian stocks climbed, heading for their highest since mid-2018, as investors mull prospects for further gains after a banner year.
Treasuries held losses from Monday. Stocks rose in Tokyo, Hong Kong, Seoul and Shanghai. They were flat in Australia after outperforming in Asia Monday. S&P 500 futures were flat after the index closed at a fresh record in the wake of the U.S.-China trade deal and signs of improving business sentiment. The yen held losses amid the risk-on mood.
The British pound dropped after two days of gains following reports that U.K. Prime Minister Boris Johnson will change the law to guarantee the Brexit transition phase isn’t extended beyond the end of 2020. That poses a potential challenge, because most observers see a U.K.-European Union trade deal needing more time.
Global investor sentiment has climbed thanks to the U.S. suspension of a planned Dec. 15 tariff hike on China. A gauge of global stocks has climbed to a record high. In Asia, Taiwan’s benchmark Taiex index hit the highest since February 1990 and the Hong Kong dollar is having its longest rally in eight years.
Still, it remains unclear how China will follow through on pledges to boost American agricultural imports, or how quickly the U.S. promise to roll back half of a September tariff hike will happen.
“We are in danger of peak optimism because we don’t have a trade deal signed and there are still some things can go wrong,” Kristina Hooper, chief global market strategist at Invesco, said. “There is this general euphoria because economic policy uncertainty has come down, but I do think it could lead to frothy markets that could be made vulnerable if something goes wrong.”
The Federal Reserve Bank of New York’s gauge of general business conditions in the next six months jumped to a five-month high, adding to the positive mood.
Elsewhere, oil hovered near a three-month high. Bitcoin stayed below $7,000.
Here are some key events to watch for this week:
- Policy decisions are due Thursday from the Bank of Japan and the Bank of England.
- Federal Reserve district bank presidents including Robert Kaplan of Dallas, Eric Rosengren of Boston and John Williams (NYSE:WMB) of New York are scheduled to speak this week.
- Revised U.S. GDP data are due Friday.
- Friday brings quadruple witching in the U.S., the simultaneous expiration date of stock index futures, stock index options, stock options and single stock futures. Expect elevated trading volume, particularly in the last hour of trading.
Stocks
- Topix index rose 0.4% as of 1:38 p.m. in Tokyo.
- Australia’s S&P/ASX 200 Index was flat.
- South Korea’s Kospi index rose 1.2%.
- Hong Kong’s Hang Seng Index added 1.1%.
- S&P 500 futures were little changed. The S&P 500 Index gained 0.7%.
- {{8867|Euro Stoxx 50 futures}} were flat.
- The yen traded at 109.53 per dollar.
- The offshore yuan was at 6.9923 per dollar.
- The Bloomberg Dollar Spot Index rose 0.1%.
- The euro was at $1.1148.
- The British pound dropped 0.3% to $1.3297.
- The yield on 10-year Treasuries held just under 1.87%.
- Australia’s 10-year bond yield was steady at 1.17%.
- West Texas Intermediate crude was little changed at $60.21 a barrel, the highest in three months.
- Gold was little changed at $1,477.17 an ounce.