Asia stocks follow global surge, dollar on defensive

Most Asian share markets took cues from a global surge in equities and rose on Thursday, while weak US economic data sent the dollar lower.

Spreadbetters expected Britain's FTSE to open slightly higher, while Germany's DAX and France's CAC were seen starting little changed.

Lacklustre economic indicators have been kind to risk assets this week, with Wednesday's weak Chinese data further boosting expectations of monetary stimulus by Beijing while soft U.S. data have also helped by dampening prospects of an early rate hike by the Federal Reserve.

A bounce by crude oil has given an additional lift to stocks by shoring up energy-sector shares.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.1 per cent. South Korean, Australian, Chinese and Malaysian stocks gained, while Japan's Nikkei lost 0.1 per cent on a stronger yen.

Wall Street shares posted sizeable gains overnight on several strong corporate earnings results and the pan-European Eurofirst 300 index of leading shares climbed to a 14-year high after the European Central Bank affirmed its loose policy stance.

Currency trade

In currencies, the region's big mover was the Aussie, lifted to a three-week high as stronger-than-expected Australian employment numbers reduced the odds of an interest rate cut in the next few months.

The Australian dollar was up 1 per cent at $0.7755 after a potential sign the labour market was not as weak as many had assumed.

"There's less probability of the Reserve Bank of Australia cutting in May, but we're sticking with our call that the RBA needs to cut the cash rate because there are still a lot of other moving parts out there that aren't good," said Stephen Walters, chief economist at JPMorgan in Sydney.

"The currency is up quite a bit after this number, inflation next week is probably going to be quite low, business confidence is low, consumer confidence is low, iron ore prices are plunging so the case (to cut) is still there, it just makes it slightly less likely."

The US dollar was on the defensive against the euro and yen after dropping the previous day on weak U.S. industrial output and New York state manufacturing activity data. The soft indicators fed uncertainty over the timing of the Federal Reserve's next interest rate hike.

The euro rose 0.1 per cent to $1.0686, adding to overnight gains. The dollar, which neared 121 yen at the start of the week, was up 0.2 per cent at 119.33 after slipping to 118.79 overnight.

The market will look to US housing data later in the day for further dollar incentives.

"Even if the actual number is in line with expectations, it will be enough to reinforce the view that the U.S. economic slowdown during winter was a temporary one, and thus support the dollar," said Masafumi Yamamoto, senior strategist at Monex Securities in Tokyo.

"If the dollar is to rise, it will gain more against the euro and Australian dollar rather than the yen as Japanese authorities have not exactly welcomed a further weakening," he said.

The Canadian dollar stood a head taller than its peers, jumping to a three-month high of C$1.2251 per USD after the Bank of Canada surprised the markets by indicating no further easings were imminent.

A surge in crude oil also supported commodity currencies such as the Canadian dollar. Crude rallied overnight after government data showed oil inventories in the United States rose less than expected last week.

Brent crude rose as high as $63.10 a barrel, highest since December 2014. U.S. crude was up 0.1 percent at $56.44 a barrel after jumping nearly 6 percent on Wednesday.

COMMENT NOW