Asian stocks rise as China’s blue chips hit a five-year peak

SYDNEY (Reuters) – Asian stocks climbed four-month spikes on Monday as investors counted on super-cheap liquidity and fiscal stimulus to sustain the global economic recovery, even as mounting cases of coronavirus delayed reopens in the United States. .

FILE PHOTO: A man in a protective face mask, after an outbreak of coronavirus disease (COVID-19), walks in front of a stock listing table outside a brokerage in Tokyo, Japan, March 10, 2020 REUTERS / Stoyan Nenov

MSCI’s broader Asia-Pacific index of stocks outside Japan rose 1% to its highest level since February.

Eyes were on the Chinese blue chips, which were up 3%, plus a 7% rise last week, to their highest level in five years. Even Japan’s Nikkei, which has lagged behind with a weak domestic economy, achieved a 1.3% rise.

“We believe there is a case for increasing the tactical allocation of Asian stocks in the context of global equity portfolios,” Nomura analysts wrote in a note.

“We see a number of catalysts that could drive the superior performance of ex-Japan (AeJ) Asia stocks over US stocks in the near term,” they added. “The best COVID-19 trends and mobility data in economies / markets dominating the AeJ index should translate into a faster economic recovery against the United States”

E-Mini futures for the S&P 500 also reaffirmed 0.8%, while EUROSTOXX 50 futures added 1.8% and FTSE futures 1.5%.

Most markets had gained ground last week when a large amount of June economic data exceeded expectations, although the resurgence of coronavirus cases in the United States is clouding the future.

In the first four days of July alone, 15 states reported record increases in new cases of COVID-19, which has infected nearly 3 million Americans and killed about 130,000, according to a Reuters count.

“It is very clear that the United States never had the COVID outbreak under control like other countries did. By reopening the economy too soon, we have seen a terrifying increase in the pace of new cases, “said Robert Rennie, chief financial market strategy at Westpac.

Analysts estimate that reopens affecting 40% of the US population have now recovered.

“Markets will therefore have to climb a wall of concern in July as economic activity is likely to ease due to the V-shaped recovery seen in recent months,” Rennie warned. “We must also remember that relations between the United States and China are deteriorating markedly.”

Two US aircraft carriers conducted exercises in the disputed South China Sea on Saturday, the US Navy said, as China also carried out military exercises that have been criticized by the Pentagon and neighboring states.

Risks, combined with relentless stimulus from central banks, have kept sovereign bonds backed against better economic data, with 10-year US yields holding at 0.67% and well above the June peak. 0.959%.

Citi analysts estimate that global central banks will likely buy $ 6 trillion of financial assets in the next 12 months, more than double the previous peak.

The major currencies have largely been limited to the dollar index at 97,189 after spending an entire month in a tight band of 95,714 to 97,808.

The dollar was a little firmer on the yen at 107.72 on Monday, while the euro rose to $ 1.1271.

In the commodity markets, gold has benefited from super low interest rates worldwide as negative real yields on many bonds make non-interest bearing metal more attractive.

Spot gold traded at $ 1,772 per ounce just above last week’s high of $ 1,788.96. [GOL/]

Oil prices were mixed in the early trade with Brent crude futures as much as 19 cents at $ 42.99 a barrel, while US crude oil fell from 23 cents to $ 40.42 amid concerns that the rise In the case of coronavirus in the United States, it would curb the demand for fuel. [O/R]

Chart: Asian stock markets here

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