* Oil consolidates overnight gains in choppy trade
* Fed minutes suggest cautious path to more tightening
* Asian stock valuations near long term averages
By Saikat Chatterjee
HONG KONG, Jan 5 Asian stocks climbed for an
eighth consecutive day on Thursday, buoyed by further gains on
Wall Street and an overnight bounce in oil prices that bolstered
energy and resource shares.
Also underpinning the cautious streak of optimism has been a
steady stream of upbeat factory and service sector surveys out
of the U.S., Europe and Asia this week, prompting some banks to
raise their global growth forecasts for 2017.
European stocks are set to take their cues from a firm Asia
with index futures pointing to modest gains.
MSCI's broadest index of Asia-Pacific stocks outside Japan
rose more than 1 percent, extending a rally that
has seen it gain 2 percent in the opening days of 2017.
India and Hong Kong led gains, while Japan's
Nikkei slipped 0.3 percent as the yen edged up on the
dollar. Philippine shares rose to their highest levels in
nearly two months and Singapore shares rose 1.3 percent.
"Recent economic data is pretty good so markets are in
risk-on mode overall and the dollar is supported. But U.S. bond
yields are being capped so the dollar is losing the driver
behind its rally," said Yukio Ishizuki, currency strategist at
U.S. shares ended higher on Wednesday even after minutes
from the Federal Reserve's December meeting showed concerns that
quicker economic growth under the Trump Administration could
require faster interest rate increases to ward off inflation.
The FOMC minutes noted upside risk to growth forecasts and
uncertainty over the level of fiscal stimulus, while some
members warned that the tighter labour market could signal a
more aggressive path of rate increases.
Still, with just over two weeks before U.S. President-elect
Donald Trump takes office, Fed officials and global investors
are also waiting for evidence that his campaign promises will be
approved by Republican lawmakers and kick the U.S. economy into
"The December minutes reinforce our view that the FOMC
remains on a cautious and gradual rate hike trajectory amid an
uncertain fiscal and economic outlook," OCBC said in a note.
Despite the extended bounce in Asian stocks, valuations
remain at moderate levels, suggesting more institutional inflows
if market conditions remain benign.
Valuations for Asian stocks are near 10-year averages in
terms of price-to-book and a price-to-earnings multiples,
according to Reuters data.
Growth in China's services sector accelerated to a 17-month
high in December, a private survey showed, adding to views that
the world's second-largest is entering the new year with
The strong pick-up mirrored improvements in manufacturing
surveys earlier this week, as market watchers debate whether
China's leaders will settle for a more modest growth target this
year in order to focus on more pressing issues such as an
explosive growth in debt.
In currencies, the dollar briefly stumbled after
policymakers noted extended gains in the greenback would weigh
on inflation, though it managed to pare losses by the end of a
choppy U.S. session.
The dollar was trading around 116.3 handle against the
Japanese yen while China's offshore yuan
strengthened against the dollar after posting its biggest daily
gain against the dollar in a year.
China stepped into both its onshore and offshore yuan
markets to shore up the faltering yuan for a second day on
Wednesday, sparking speculation that it wants a firm grip on the
currency ahead of Trump's inauguration on Jan. 20.
U.S. Treasuries consolidated recent gains after the Fed
minutes with two-year bond yields edging lower to
After rising nearly 2 percent overnight, oil prices dipped
in Asian trade on doubts that producers would fully deliver on
promises to cut output, although record U.S. automobile sales
and falling crude stockpiles offered markets some support.
U.S. West Texas Intermediate (WTI) crude oil futures
were flat at $53.25 per barrel and Brent crude futures,
the international benchmark for oil prices, were trading at
$56.39 per barrel.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by
Eric Meijer and Kim Coghill)