Asian shares approach 2007 peak

Asian shares inched closer to their record 2007 peak on Friday as US jobs data pointed to firm economic growth although the greenback was soft as the spectre of benign inflation capped domestic bond yields. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent in early trade, with the benchmark index in Australia and South Korea both up about 0.5 per cent.

The MSCI index was about 1 per cent off the all-time peak it hit in November 2007 of 591.5. Japan's Nikkei also gained 0.5 per cent to a 26-year high. MSCI's gauge of stocks across the globe has risen 2.1 per cent so far this week, on course to log its best weekly performance since July.

The US ADP National Employment Report on Thursday showed US private employers added 250,000 jobs in December, the biggest monthly increase since March and well above economists' expectations of a rise of 190,000. That helped the Dow Jones Industrial Average sail past the 25,000-mark for the first time. S&P 500 gained 0.40 per cent while the Nasdaq Composite added 0.18 per cent, both notching record closing highs.

Despite the strong US jobs report, the dollar was soft, hovering just above its three-month low against a basket of major currencies. The dollar index stood at 91.860, near Tuesday's three-month low of 91.751. “The dollar looks very weak at the moment. And I think the reason comes down to the fact that US long-term bond yields are very low despite the Fed's rate hikes,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman.

The 10-year US Treasuries yield stood at 2.460 per cent , below its seven-month peak of 2.504 per cent touched on Dec. 21. Even after the Fed hiked interest rates three times last year, its levels are little different from about a year ago. US long-term bond yields were capped partly by investors' expectations that inflation will remain tame.

The euro held firm at $1.2075, holding its gains so far this week of 0.6 per cent and coming within sight of its 2 1/2-year peak of $1.2092 set in early September. Many emerging economy currencies have gained sharply against the dollar this week as investors look for higher yields. Since the start of 2018, the Brazilian real gained 2.4 per cent, the Mexican peso 1.8 per cent, the Indonesian rupiah 1.1 per cent and the Indian rupee 0.7 per cent.

In commodities markets, oil prices held near their highest level since May 2015, on concerns about supply risks due to unrest in Iran and another decline in US inventories as refining activity hit a 12-year high. US crude stood at $61.94 a barrel after having risen to as high as $62.21 the previous session.

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