SINGAPORE / BOSTON (Reuters) – Asian stock markets rose on Tuesday in relief that another round of Sino-American sparring did not appear to have exaggerated trade, while hopes for US stimulus boosted oil and commodity qualities.
FILE PHOTO: A man wearing a protective face mask, following the outbreak of coronavirus disease (COVID-19), runs for a quote for quotes outside a broker in Tokyo, Japan, May 18, 2020. REUTERS / Kim Kyung-Hoon
MSCI’s widest index of shares in Asia-Pacific outside Japan .MIAPJ0000PUS was up 1%. Japan’s Nikkei .N225 returned from a holiday with a gain of 1.7% led by healthcare and industrial stocks and the Hang Seng .HSI jumped 2.2%.
The risk-sensitive Australian and New Zealand dollars each rose about 0.3%, although they sit comfortably below recent milestone peaks, as some sadness dampens the rise. [AUD/]
Investors are awaiting a meeting between top US and Chinese traders on Saturday to discuss the first six months of the Phase 1 trade agreement.
With China lagging far behind in purchasing energy and farm goods from the United States, it could assume from the markets that the trade relationship is isolated from shrinking diplomatic ties between the two nations.
However, there was tangible relief on Tuesday that China’s sanctions on 11 U.S. citizens – a response to U.S. sanctions on Chinese individuals over Beijing’s collapse in Hong Kong – triggered the latest round of tit-for-tat discs.
“It has left the White House untouched,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.
“It gives some relief that China is still giving some priority to the (trade) dialogue,” he said. “It’s just the feeling that you are not shaking the boat until hijacking, that’s the empty bar today.”
Safe harbors were under gentle pressure over the entire board. Gold XAU = slipped about 0.6% to $ 2,015 an ounce and the US bond market extended a recent selloff, with yield on benchmark 10-year Treasury US10YT = RR at a two-week high of 0.5870%.
ONWARDS AND UPWARDS
During the day, Wall Street found some support after Trump signed executive orders to recover part of unemployment benefits after talks between the White House and top Democrats over fresh stimulus were broken last week.
The Dow .DJI rose 1% and the S&P 500 .SPX stepped forward, while the Nasdaq .IXIC sold slightly lower as investors cut some tech holdings in favor of value stocks.
The S&P 500 is now less than 1% below a record high hit in February, while in Asia the MSCI ex-Japan index is within 2% of a very high peak in January.
The movements have driven ratings in Asia to sluggish heights, about 20% above averages of financial crisis. But Nomura’s Jim McCafferty in Hong Kong said the high levels were justified by a huge shift in investor preferences.
“The composition of the index of equities in the region has changed dramatically,” he said. “Oil, telcos and banks used to dominate … now it’s the internet and tech.”
S&P 500 futures ESc1 rose 0.3% and oil traded strongly on hopes that a US stimulus action could still be struck and expect growing demand in Asia. [O/R]
Brent crude futures LCOc1 were up 0.4% at $ 45.16 a barrel and US crude CLc1 rose 0.6% to $ 42.18.
In addition to the Aussie and Kiwi, other major currencies made very marginal gains on the dollar, while the yen fell lower.
The euro EUR = EBS bought last $ 1.1746 and the yen JPY = traded at 106.02 per dollar. [FRX/]
Chinese credit figures are due this week, while UK labor data and a German sentiment survey at 0830 GMT and 0900 GMT respectively will provide the latest reading on Europe’s recovery.
Investors expect British unemployment to hit 4.2% in June and to keep German economic sentiment broadly stable.
Report by Tom Westbrook in Singapore and Lawrence Delevigne in Boston; Edited by Sam Holmes and Richard Pullin
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