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GLOBAL MARKETS-Asia shares echo Wall St cheer, China more muted

Published 17/10/2018, 04:14 pm
© Reuters.  GLOBAL MARKETS-Asia shares echo Wall St cheer, China more muted
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* Nikkei up more than 1 pct, but China stocks lag

* Netflix surges on strong results, lifts FANG sector

* Dollar mixed as risk sentiment favours emerging markets

By Wayne Cole

SYDNEY, Oct 17 (Reuters) - Asian equities got some welcome relief on Wednesday after upbeat U.S. earnings reports drove a rebound on Wall Street and helped restore a little faith in emerging market stocks and currencies.

Japan's Nikkei .N225 galloped out of the gates with a rise of 1.7 percent, but still has a way to go to recoup the past week's losses.

"The Nikkei appears to have bottomed out," said Soichiro Monji, senior economist at Daiwa SB Investments.

"The latest tumble was not driven by convincing factors - the market may have needed to adjust after its sharp rally and upcoming corporate earnings should provide evidence of solid economic fundamentals."

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.7 percent and South Korea .KS11 1.2 percent, while spreadbetters pointed to opening gains for the major European bourses.

Chinese blue chips, however, lagged with a gain of only 0.2 percent .CSI300 and threatened to sour the mood.

On Wall Street, the three major indexes had tallied their biggest one-day percentage gains since March. The Dow .DJI jumped 2.17 percent, while the S&P 500 .SPX climbed 2.15 percent and the Nasdaq .IXIC 2.89 percent. .N

Netflix Inc NFLX.O shot 12 percent higher after the close as its results far outstripped market expectations with 7 million streaming customers added. blockbuster outcome sent shares of Alphabet Inc GOOGL.O , Facebook Inc FB.O and Amazon.com Inc AMZN.O up about 1 percent in extended trade.

The four make up the so-called FANG group of high-growth companies that in recent months has lost some of its momentum following market-leading gains in recent years.

"Most have blamed last week's volatility spike on the systematic funds liquidating positions, as the short volatility trade unwound rapidly," said Chris Weston, head of research at broker Peppertsone.

"This, in turn, has allowed traders to re-focus away from the macro towards micro, and, predictably, solid U.S. corporate earnings."

The U.S. economic news was also robust, notably a sharp rise in job openings to a fresh all-time high. BIGGEST THREAT

All this cheer favoured beaten-down currencies in emerging markets while taking some steam out of the safe-haven yen. The MSCI Emerging Market Currency Index rose for a third straight session .MIEM00000CUS .

The latest survey of global fund managers by BofA Merrill Lynch found they saw emerging market currencies as the most undervalued ever against the U.S. dollar.

The dollar itself was up on the yen at 112.35 JPY= but flat on the euro at $1.1570 EUR= . Against a basket of currencies, the dollar idled at 95.123 .DXY having touched a two-week trough overnight.

Not helping the dollar was fresh criticism of the Federal Reserve from U.S. President Donald Trump, who told Fox Business Network: "My biggest threat is the Fed."

Trump has recently castigated the central bank for raising interest rates.

"While such name calling shouldn't mean anything in terms of what the Fed actually does, it is a factor which somewhat undermines sentiment towards the dollar," said Ray Attrill, head of FX strategy at NAB.

"It's a contributory factor, albeit minor, to recent poor performance of the U.S. dollar."

Minutes of the last Fed meeting are due out later Wednesday and expected to show policy makers remain committed to further gradual tightening. commodity markets, gold held at $1,221.11 XAU= and just short of recent 11-week highs.

Oil prices edged up as industry data showed a surprise decline in U.S. crude inventories. There was also a risk that crude supply from the Middle East could be disrupted by looming U.S. sanctions on Iran and growing tensions with top exporter Saudi Arabia. O/R crude rose 9 cents to $72.01 CLc1 , while Brent crude LCOc1 added 4 cents to $81.45 a barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam and Sam Holmes)

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