Asian stocks edged higher for a third consecutive day on Wednesday as investors focused on strong corporate earnings and the dollar gave back some of its recent gains.
US President Donald Trump’s abrupt dismissal of FBI Director James Comey prompted some unwinding of risky bets in early Asian trading but strategists said investors were cheered by a strong slate of corporate earnings, reflecting the cyclical rebound in the first quarter of 2017 was still in place.
European stocks are set to follow Asia’s example, with major indices set for a broadly flat start according to index futures.
“Markets are setting aside the many policy changes seen from the Trump administration and focusing on the improvement in corporate performance and that should support sentiment,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management in Hong Kong.
With results in for the majority of the companies on the S&P 500, estimated first quarter earnings growth is now at 14.5 percent, highest since the third quarter of 2011, Thomson Reuter’s data shows with roughly 75 percent of companies are beating analysts’ expectations.
That has helped Asia as well, with 12-month forward earnings per share for the MSCI index of Asia- Pacific shares outside Japan rising to its highest level in more than three years.
“Strong corporate earnings are supporting risk sentiment in the Asian equity markets, said Fan Cheuk Wan, head of investment strategy and advisory at HSBC Private Banking.