* U.S. tax reform hopes bolster risk-on sentiment
* MSCI Asia-ex Japan set for fifth day of gains
* Euro firm near 5-1/2-month high vs dollar after French
* Oil resumes downward trend on bulging U.S. crude
By Saikat Chatterjee
HONG KONG, April 26 Asian stocks extended gains
for a fifth consecutive day on Wednesday, as renewed optimism
about the world's biggest economy brightened the outlook for
risky assets while the euro held on to previous gains as
political concerns in France ebbed.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.5 percent, hovering near their highest
since June 2015. Stock markets in Japan and Australia
European markets were pointing higher in opening trades with
index futures up between 0.05 and 0.1 percent.
"We are carrying on the momentum from the overnight rally in
the U.S. markets and financials are in the spotlight on
expectations of good earnings," said Alex Wong, a fund manager
at Ample Capital Ltd in Hong Kong, with about $130 million under
The outlook for Asian markets is looking favourable with the
MSCI Asia ex-Japan index having broken above a technical level,
suggesting more room for gains.
A strong finish to U.S. markets was the main driver for
Asia. The Nasdaq Composite hit a record high on Tuesday, while
the Dow and S&P 500 brushed against recent peaks as strong
earnings underscored the health of corporate America.
Fanning the market's rally were reports that President
Donald Trump's tax reform proposals, due to be announced on
Wednesday, would include a slashing of the corporate tax rate
and lower taxes on offshore earnings stockpiled by U.S.
The threat of a U.S. government shutdown this weekend also
receded after Trump backed away from demanding Congress include
funding for his planned border wall with Mexico in a spending
Financials led the Hong Kong stock market higher as fund
managers bet on expectations the quality of banks' balance
sheets will likely get better on an improving economic cycle and
In Hong Kong, for example, the financial sector trades at a
forward price-to-earnings ratio of 8.7 times compared with
traditional market darlings of technology stocks at 29 times,
according to Thomson Reuters data.
In currency markets, the euro built on strong gains posted
this week after business-friendly centrist Emmanuel Macron won
the first round of the French vote on Sunday and opinion polls
indicated less support for the eurosceptic Marine Le Pen.
While that is not expected to sway the European Central Bank
into further action at Thursday's meeting, policymakers see
scope for sending a small signal in June towards reducing
monetary stimulus, according to sources, another factor
underpinning the single currency.
"In our view, downside risks to growth have actually
decreased with the outcome of the first round of the French
election...the underlying tone of the press conference should
still be positive," Holger Sandte, a strategist at Nordea
markets wrote in a note.
The euro was steady at $1.09480, retaining most
of Monday's 1.3 percent gain. On Monday it posted its strongest
one-day performance in 10-1/2 months, which lifted the common
currency to a 5-1/2-month high.
Growing appetite for risk meant safe-haven assets fell out
of favour, with U.S. 10-year Treasury yields firming
to 2.34 percent from 2.23 percent on Friday.
U.S. crude futures slipped after a volatile overnight
session following an industry report showing a surprise build-up
in inventories. U.S. crude futures were down 0.3 percent
at $49.41 a barrel.
(Additional reporting by Masayuki Kitano in SINGAPORE; Editing
by Jacqueline Wong)