SINGAPORE (Reuters) – Japanese stocks were up six months and the dollar was under pressure on Thursday as investors positively plucked from recent economic data and bets on China and the United States with their trading sales at a crucial weekend meeting .
FILE PHOTO: Passers-by wearing protective face masks, following an outbreak of coronavirus, are reflected on a screen displaying stock prices outside a brokerage in Tokyo, Japan March 6, 2020. REUTERS / Issei Kato
MSCI’s broadest index of shares in Asia-Pacific outside Japan .MIAPJ0000PUS was up 0.1%, while gains in semiconductor manufacturers drove Japan’s Nikkei .N225 1.8% higher after a six-month peak.[.T]
The rally follows Wednesday’s gains in Europe and on Wall Street – which left the S&P 500 .SPX within a whisker of a high closed record. But future prices suggest that the latest round of optimism may lose steam in the European day.
Euro STOXX 50 futures STXEc1 were 0.1% last, FTSE futures FFIc1 slid 0.7% and S&P 500 futures ESc1 were 0.1% down.
“People see the glass half full and test the waters,” said Moh Siong Sim, currency analyst at Bank of Singapore.
The entire week saw a selloff in the U.S. bond market, as investors earned the largest 10-year paper auction, raising returns enough to trigger a sharp pullback in gold, as well as falling in the yen as currents come from Japan.
At the same time, the number of daily new COVID-19 infections in the United States seems to stabilize around 55,000 and an unexpected jump in consumer prices over the past month seems to boost confidence in the recovery.
On Thursday, US 10-year yields US10YT = RR took a touch back to 0.6638%, gold XAU = steep at $ 1,926 per ounce and the dollar was back under pressure against the euro. [GOL/]
But the scale and pace of gains in the stock market are starting to raise some concerns. Analysts at OCBC in Singpore are worried that a stress index they launched in April has done nothing but tumble since its inception.
“Market stress … has fallen to such a low level that we are beginning to question when we are missing out on something,” wrote OCBC economist Wellian Wiranto.
“With that in mind, we are zooming in on the US-China tensions, which may be starting to function prominently,” he said.
The next flash point is likely to be Saturday, when top officials will gather to monitor the progress of the Phase 1 trade pact.
White House economic adviser Larry Kudlow said this week the deal was “currently good”, comments that helped the yuan reach a five-month high on Thursday in a sign of market confidence.
But China has been left behind in purchasing goods and energy and, Bloomberg News reported on Wednesday, is likely to increase other areas of the two-country growing conflict during trade talks.
DOLLAR DRUK
Elsewhere, the upbeat sentiment held broad pressure on the dollar. [FRX/]
Markets are still waiting forever for a breakthrough in wrestling over the next U.S. incentive package. Little sign of progress is not helpful for the US economy and helped the euro EUR = poke back above $ 1.18 and sterling GBP = to move forward.
The Australian dollar AUD = shot ahead to figures on better-than-expected jobs – although the fact that unemployment was above a million for the first time covered profits. It was last at $ 0.7171.
Australia was also the outlier in regional stock markets, with sales giant communications giant Telstra (TLS.AX) to dive to a profit on the index.
Korea’s Kospi .KS11 led gains in other markets outside Japan, rising 0.7% to a two-year high.
In commodities, oil mostly complains about solid gains made during the day when a drop in U.S. crude inventories gave hope that demand for fuel would recover. [O/R]
Brent crude futures LCOc1 were last 0.2% softer at $ 45.33 per barrel, while US crude CLc1 fell by the same margin to $ 42.60 per barrel.
US weekly unemployment claims are on the horizon around 1230 GMT and investors expect a modest downtrend to continue.
Report by Tom Westbrook in Singapore. Additional reporting by Lawrence Delevingne in Boston. Edited by Sam Holmes and Gerry Doyle
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