Asian shares follow Europe higher on EU relief, auto merger

Australian shares were up 0.51%, while Japan’s Nikkei stock index gained 0.41%.

Asian shares tracked European gains on Tuesday, as relief over EU election results eased concerns about political difficulties in the bloc and merger news supported auto shares, although persistent concerns about trade capped regional sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.07% in early trade, and US S&P 500 e-mini futures rose 0.14% to 2,835.75.

Australian shares were up 0.51%, while Japan’s Nikkei stock index gained 0.41%.

Those small gains followed a relatively light session in Europe on Monday, with financial markets the UK and US closed for holidays.

European auto shares had rallied after Italian-American carmaker Fiat Chrysler confirmed it had made a “transformative merger” proposal to French peer Renault in a deal which would create the world’s third-biggest carmaker. That sector rally spilled into Asia with Mitsubishi Motors Corp in Japan adding 3.17% and Nissan Motor Co gaining 2.11%. Provisional results from EU elections also buoyed markets after pro-union parties kept a firm grip on power in elections to the European Parliament. The pan-European STOXX 600 added 0.22%.

“Although Eurosceptic and anti-establishment parties didn’t win as many seats as expected, their influence has increased significantly. This could have implications for the political color of key EU positions,” said Rodrigo Catril, senior FX strategist at National Australia Bank.

“The Parliament composition is also likely to have implications on the priority agenda for future EU reform, particularly with respect to things like immigration, fiscal spending and fiscal union,” he added, noting a decrease in bond yields pointed to continued risk aversion.

Benchmark 10-year German Bunds hit a low of -0.147% on Monday, their lowest level since September 2016.

On Tuesday, U.S. yields were also lower. Benchmark 10-year Treasury notes yielded 2.3132%. The two-year yield touched 2.1766%.

Trade concerns also remain high on investors’ list of concerns. U.S. President Donald Trump said on Monday that Washington was not ready to make a deal with Beijing but he expected one in the future, while at the same time pressing Japanese Prime Minister Shinzo Abe to even out a trade imbalance with the United States.

The dollar was up 0.05% against the yen at 109.55, and fell 0.04% against the euro, with the common currency buying USD 1.1192.

The dollar index, which tracks the greenback against a basket of six major rivals, 0.14% higher at 97.754.

In commodity markets, oil prices wavered after gaining more than 1% on Monday on tensions in the Middle East and OPEC-led supply cuts, as well as continuing Russian supply disruptions after a contamination problem discovered last month.

Brent crude dipped back below the USD 70 mark, falling 0.26% to USD 69.93 per barrel, but US West Texas Intermediate crude remained higher, adding 0.72% to USD 59.05 per barrel.

Spot gold was flat at USD 1,284.80 per ounce.

Bitcoin, which on Monday had touched USD 8,939.18, its highest level in more than a year, retreated 0.14% to USD 8,758.48. The cryptocurrency topped USD 8,000 for the first time since July 2018 on May 13.

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Asian shares rise on strong US GDP, eyes on Fed, China

Asian stock markets edged up on Monday after surprising strong US first-quarter economic growth boosted the S&P 500 index to a record high, but gains were capped by caution over less upbeat aspects in the GDP report which pointed to some weakening ahead.

Investors were also awaiting a meeting of the US Federal Reserve this week and Chinese factory data for further clues on policy direction in the world’s biggest economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up less than 0.1 percent, edging higher after posting its biggest weekly drop in more than a month last week.

Australian shares were down 0.26 percent, while Seoul’s KOSPI was up 0.4 percent.

Japan’s financial markets are closed for a long national holiday this week, but Nikkei 225 futures in Singapore were 0.72 percent higher.

In contrast with weakness in Asian markets last week, Wall Street ended Friday on a high note following data showing US gross domestic product grew at a faster 3.2 percent annualized rate in the first quarter.

The Dow Jones Industrial Average rose 0.31 percent to 26,543.33 and the Nasdaq Composite added or 0.34 percent to 8,146.40.

The S&P 500 gained 0.47 percent to 2,939.88, its second record closing high for the week.

Stephen Innes, managing partner at SPI Asset Management, said that despite stronger-than-expected earnings helping to lift markets, he sees “overly extended” S&P positioning.

“We have flipped from a state where it is a stock rally no one wants to take part in, to a frenzied paced splurge where hedge funds and investors alike continue to chase markets like greyhounds to the mechanical rabbit,” he said in a note.

While the strong GDP data helped to ease fears of an imminent recession, investors noted that it was driven by a smaller trade deficit and a large accumulation of unsold merchandise, as consumer and business spending slowed sharply.

In a morning note to clients, analysts at National Australian said the strong GDP has a “soft underbelly”, noting weak inflation.

“It is the thought that a downturn in inflation could have the Fed cutting rates before 2019 is out – at a time when the Fed is openly discussing wanting to tolerate a period of above target inflation to make up for past shortfalls – that had the interest rate markets moving the implied probability of a 2019 easing out,” they said.

The March reading for core personal consumption expenditures (PCE), the Fed’s favored inflation measure, is due later on Monday. The central bank will announce its policy decision on Wednesday, with Chairman Jerome Powell expected to balance the strong growth data against persistent concerns over the outlook for global growth.

Markets will also be looking to global factory activity surveys this week, particularly official and private readings on Chinese manufacturing which will both be released Tuesday.

While better-than-expected March data from China have helped eased fears of a sharp global slowdown, it has also touched off an intense debate over how much more stimulus Beijing can roll out without risking a rapid build-up in debt and potential asset bubbles.

In currency markets, the dollar was flat against the yen at 111.61. The euro was also barely changed, rising 0.02 percent to $1.1150.

The dollar index, which tracks the greenback against a basket of six major rivals, inched higher to 98.033.

US crude dipped 0.7 percent at USD 62.86 a barrel, continuing lower after US President Donald Trump on Friday pressured the Organization of the Petroleum Exporting Countries to raise crude production to ease gasoline prices.

Brent crude fell to USD 71.6 per barrel.

Spot gold was slightly lower, trading at USD 1,285.29 per ounce.

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Source: Moneycontrol

Asian shares edge up to nine-month high, European, Japan PMIs awaited

Asian shares were subdued on Thursday after a negative performance on Wall Street, with caution ahead of business surveys in Europe and Japan, and the Good Friday and Easter holidays keeping investors on the sidelines.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.08 percent, trading just below its highest since late July 2018 brushed on Wednesday.

Australian shares advanced a quarter of a percent while Japan's Nikkei was a shade lower.

"We're in this kind of hiatus in the global economy," said Chris Weston, head of research at foreign exchange brokerage Pepperstone in Melbourne.

"People are starting to believe that we're going to see better times in the second quarter and probably into the third quarter as well, and that perhaps the first quarter has been that trough."

Wall Street shares ended in the red on Wednesday, with the S&P 500 falling 0.2 percent as a drop in healthcare equities outweighed upbeat economic data from the United States and China.

The US trade deficit fell to an eight-month low in February as imports from China plunged, data on Wednesday showed.

Separate figures from China earlier in the day showed the world's second-largest economy grew at a steady 6.4 percent pace in the first quarter, defying forecasts for a slowdown. Attention is now turning to how much more stimulus Beijing will apply without triggering more financial risks.

Investors' immediate focus turned to the release of Purchasing Managers Indexes (PMIs) for the manufacturing and service sectors in Europe later on Thursday to provide more clues on the strength of the euro zone economy.

"It's going to be interesting to see if we see some stabilization there in line with what we've been seeing in the stabilization in the Chinese data flow," said Pepperstone's Weston.

A flash manufacturing reading will also be released for Japan.

YEN NEAR 2019 LOW

Market participants are also eyeing signs of progress in U.S.-China trade negotiations.

Washington and Beijing set a tentative timeline for a fresh round of face-to-face meetings ahead of a possible signing ceremony in late May or early June, according to a Wall Street Journal report.

Attorney General William Barr is set to hold a news conference at 1330 GMT to discuss the release of Special Counsel Robert Mueller's report on Russian interference in the 2016 U.S. presidential race.

"The lack of love for the yen, I suppose, is just telling us that people aren't seeing this as a general risk event," said Pepperstone's Weston.

"It's probably worth keeping a beady eye in case something really does come out that shocks market into life."

In the currency market, the safe-haven yen was slightly up at 112.00 yen per dollar, sitting just above a near four-month low of 112.17 brushed overnight.

The euro ticked up to $1.1297, while the Australian dollar was 0.1 percent lower at $0.7173 ahead of job data (0130 GMT).

The dollar index held steady at 97.019 after ending the previous session basically unchanged.

In commodity markets, oil prices were slightly lower as U.S. government data overnight showed inventories drew down less than an industry report had suggested on Tuesday.

US crude was last down 8 cents at $63.68 a barrel, while global benchmark Brent crude futures dipped 7 cents to $71.55.

Spot gold held steady at $1,274.60 per ounce, hovering near its lowest for the year.

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Source: Moneycontrol