Asia stocks in four-month high as markets remain stubbornly optimistic

SYDNEY (Reuters) – Asian stocks hit a four-month high on Wednesday as investors remained stubbornly optimistic about prospects for a reopening of the world economy, even as coronavirus cases appeared to be accelerating to new peaks.

FILE PHOTO: A man wearing a protective face mask, after the outbreak of coronavirus disease (COVID-19), walks in front of a stock listing table outside a brokerage in Tokyo, Japan, May 18, 2020 REUTERS / Kim Kyung-Hoon

MSCI’s broader index of Asia-Pacific stocks outside Japan added 0.5% to reach its highest level since pandemic blockades first attacked markets in early March.

South Korea led with a 1.6% gain, while Japan’s Nikkei held steady for a steady yen. E-Mini futures for the S&P 500 reversed early losses to gain 0.2%, while EUROSTOXX 50 futures lagged behind with a loss of 0.3%.

On Wall Street, the Dow was 0.5% higher Tuesday, while the S&P 500 gained 0.4% and the Nasdaq 0.7%.

According to a Reuters count, the news about the coronavirus was not encouraging, as several US states. USA They saw record infections and the death toll in Latin America exceeding 100,000 on Tuesday.

The European Union is even prepared to ban American travelers due to the increase in cases in the country, placing it in the same category as Brazil and Russia, the New York Times reported.

However, the market assumes that there is a very high bar to close the economies again, so the impact on business activity will not be too great.

Stubborn optimism about the global economy was backed by optimistic manufacturing polls from Europe, with France sticking out as the blockade that was loosened there led to a modest return to growth.

That followed solid June readings from much of Asia, although Japan disappointed.

“A surprise in recent data has been the resilience of activity data in emerging Asia, even as the world economy slowed sharply and world demand remains below pre-pandemic levels,” analysts at JPMorgan on a note.

“This result appears to be largely due to the technology sector outperforming the non-technology sector, which probably reflects in part a temporary boost in demand for work from home.”

The best European data combined with the positive risk mood to keep the US dollar under pressure. Against a basket of major currencies, it dipped to 96,578 from a high of 97,719 earlier in the week.

The euro rose to $ 1.1320, having been as low as $ 1.1167 on Monday, while the dollar fell to 106.50 yen after hitting a six-week low of 106.06 in one stage.

“The dollar and risk sentiment are likely to continue to be negatively correlated across the board, unless the US shows clear and lasting leadership in the global economic recovery, which is difficult to square with the gloomy US news. COVID, “said Ray Attrill, head of FX strategy at COGER.

The New Zealand dollar relaxed after the country’s central bank said it may have to do even more to stimulate the economy, including further cutting rates, expanding bond purchases or even buying foreign assets.

In the commodity markets, the falling dollar and endless cheap liquidity from central banks helped lift gold to its highest level since October 2012. The metal was last at $ 1,770 an ounce.

Oil futures declined from four-month highs after US crude inventories. USA They increased 1.7 million barrels last week, according to industry data. That compares with analyst expectations for a 300,000 barrel construction. Data from the United States government will be released on Wednesday.

Brent crude futures declined 8 cents to $ 42.55 a barrel, while US crude fell 20 cents to $ 40.17.

Editing by Jacqueline Wong and Sam Holmes

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