Asian shares firm, euro slips to 1 year low on ECB easing hopes
Aug 26 2014 , Tokyo
The euro slipped to a one-year low against the dollar as comments from ECB chief Mario Draghi late last week that the central bank was prepared to respond with all its "available" tools resonated in the market.
"Draghi's speech marked a turning point in ECB rhetoric... He also confirmed that beyond liquidity injections through the TLTROs and outright ABS purchases, the ECB was ready to do more if necessary" Philippe Gudin, an economist at Barclays, said in report.
South Korean shares rose 0.3% and the Australian market edged up 0.2% in early trade. MSCI's dollar-denominated index of Asia-Pacific shares outside Japan tacked on 0.05%.
Japan's Nikkei average was little changed in early trade.
The mood in the market was buttressed by the S&P 500, which briefly topped the 2,000 mark for the first time in history on Monday, and closed up 0.48% at 1,997.92.
European stocks led the rally in global equities overnight, with many country and regional indexes climbing more than 1%, as investors grew convinced that the ECB could adopt quantitative easing as soon as next week.
On Wall Street, the biggest winner was financial shares, seen as the main beneficiary of any cheap money from the ECB at a time the US Federal Reserve is preparing the ground to exit from zero interest rates.
The euro fell to $1.31785 in early Asia, its lowest level since early September last year, with a test of the $1.30 mark seen as inevitable.
Speculation that the ECB may buy debt of euro zone countries drove down yields on bonds from Germany, France, Italy, Spain, Portugal, Ireland and elsewhere to all-time lows.
German 10-year yields hit a record low of 0.926%, before puling back to 0.95%.
Germany's Ifo business climate index published on Monday showed business confidence sagged for the fourth straight month, further fanning expectations of major asset purchases by the ECB.
The US dollar was broadly firm in contrast, with its index against a basket of currencies hitting a one-year high of 82.636.
Against the yen, the dollar fetched 104.08 yen, not far off its seven-month peak of 104.49 yen hit on Monday.