Commodities prices remained firm, bolstering shares of resources firms, on signs that the global economy is gathering strength. Copper surged to record peaks near $10,000 a tonne, while Brent crude remained above $101 a barrel — its highest since October 2008.
After a million people took to the streets in Egypt on Tuesday, Egyptian President Hosni Mubarak said he would surrender power in September, but that was not enough for many protesters who demanded an immediate end to his 30-year rule.
Much now appears to depend on whether the army can ensure a peaceful leadership transition.
“The easing of the crisis in Egypt helped investors to concentrate on positive economic data from the U.S., boosting their appetite for equities,” said Hideyuki Ishiguro of Ikasan Securities.
Japan’s Nikkei index .N225 rose 1.8 percent — its biggest daily advance in around two months — as the latest in a string of bullish U.S. economic data pushed Wall Street to its highest levels in 2- years. .N
The MSCI index of Asian shares outside of Japan .MIAPJ0000PUS advanced 1 percent, though activity was thin ahead of the long Lunar New Year holidays in much of Asia.
Hong Kong’s Hang Seng Index .HSI climbed 1.8 percent in a shortened session while Australia’s main benchmark .AXJO gained 0.9 percent despite the approach of Cyclone Yasi, said by forecasters to be the strongest ever to strike the country.
Global mining giants BHP Billiton and Rio Tinto both rose more than 2 percent as metals prices continued to rally.
The dollar was stuck near its lowest level in three months against the euro as robust economic data eased concerns over Egypt and coaxed investors out of safe-haven assets. The euro rose to $1.3853 on trading platform EBS, a touch higher than late U.S. levels.
“When investors’ risk appetite grows, the dollar becomes a funding currency,” said Junya Tanase, a strategist at J.P. Morgan Chase bank.
The U.S. manufacturing sector grew at its fastest pace in nearly seven years, data showed on Tuesday, but factories’ costs are also rising and are being passed on to consumers, raising fears of both a spike in inflation and a slowdown in sales as buyers baulk at higher prices.
On Wall Street, investors capitalized on last week’s pullback, sending the Dow to close over the psychologically important level of 12,000 for the first time since June 2008 and the S&P 500 to close above 1,300 for the first time since August 2008.
Markets considered the crisis in Egypt contained for now, with little risk of spreading elsewhere through the oil-rich region after Mubarak said he would surrender power soon — although opposition leaders dismissed his speech, protesters stayed put and President Barack Obama called for faster change.
Commodity prices remained strong, with London copper futures rallying to a record high of $9,980 — bolstered by positive manufacturing data from China and the United States and speculative interest in physical commodities.
North Sea Brent crude oil futures eased 0.3 percent to $101.44 as traders continued to watch if the unrest in Egypt would curb its oil shipments, while U.S. crude futures slipped closer to $90.