Global Markets: Asian shares recover on record Dow close, US data

Asian shares edged higher on Friday, shrugging off three days of losses as new U.S. data suggested a steady recovery in the world's largest economy, bolstering investors' risk appetite.

Japan's Nikkei stock average was among the regional outperformers, climbing 0.8 percent to a new 4-1/2-year peak after parliament approved Haruhiko Kuroda as the next governor of the Bank of Japan and his two new deputies.

Markets are expecting the BOJ to take more aggressive policy easing measures as soon as its next scheduled policy meeting on April 3-4.

"We see several signs of a little bit of overheating in the Japanese market, but strength in the overseas market serves as a tailwind to Japanese equities," said Hiroichi Nishi, an assistant general manager at SMBC Nikko Securities.

Expectations that the new BOJ leadership will take more aggressive monetary easing policies sought by Prime Minister Shinzo Abe as part of his economic revival plan have driven yen selling and share buying for the past four months.

Some market observers say the premiums based on such expectations are now fully priced in to the dollar, which may be topping out against the yen, as seen in risk reversals – or put and call options – flipping toward bets that the yen will rise.

"As the actual BOJ meeting approaches, some people are getting scared," said Daisuke Karakama, market economist for Mizuho Corporate Bank in Tokyo, adding Kuroda may run out of new policy options in the next three to four meetings and may revert to conventional buying of government bonds.

"Fundamental supply/demand related reasons justified selling the yen down to 90, but the additional 5-6 yen to current levels is purely due to the Abe premiums. Now, it's a tug-of-war with the Japan-specific yen selling and the dollar buying based on the strength of the U.S. economy," Karakama said.

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