Hong Kong/Singapore (Reuters)-Asian stocks rose on Tuesday as people were relieved that another round of Sino-US trade disputes did not seem to have spread to trade, while hopes for US stimulus measures provided support for oil and commodity currencies.
File picture: A man wearing a protective mask after the coronavirus disease (COVID-19) outbreak, walks in front of a stock quote board outside a brokerage company in Tokyo, Japan, on May 18, 2020. REUTERS/Kim Kyung-Hoon (Kim Kyung-Hoon)
The European market is expected to open higher. EUROSTOXX 50 STXEc1 futures rose 0.86%, while FTSE futures FFIc1 rose 0.77%.
MSCI is the most extensive index in the Asia-Pacific region outside of Japan. MIAPJ0000PUS rose nearly 1%. Japan’s Nikkei .N225 was closed for the holidays, rising 1.85%, led by healthcare and industrial stocks, and Hang Seng. HSI rebounded 2.3%.
South Korean stock market .KS11 got rid of the impact of the decline in exports and rose for the seventh consecutive trading day. In August, it has risen 1.4%, or 7.5%.
However, the Singapore benchmark .STI lags behind the country, saying it is expected to be the largest recession in history.
Investors are waiting for Saturday’s meeting of senior Chinese and US trade officials to review the first six months of the first phase of the trade agreement.
As China lags far behind in purchasing energy and agricultural products from the United States, it may test the market’s hypothesis that trade relations are not affected by the collapse of diplomatic relations between the two countries.
However, there was a clear sigh of relief on Tuesday that China’s sanctions on 11 American citizens-in response to Beijing’s crackdown on US sanctions against Chinese individuals in Hong Kong-seemed to prevent the latest round of tit-for-tat moves.
Vishnu Varathan, head of economics at Mizuho Bank in Singapore, said: “This keeps the White House unchanged.”
He said: “This makes China feel relieved that it is still prioritizing (trade agreement) dialogue.” “This is the feeling that you did not roll the ship to the tipping point. This is today’s minimum standard.”
The safe harbor is under light pressure across the board. Gold XAU = fell by about 0.48% to US$2,017.5 per ounce. The US bond market continued the recent sell-off, and the yield on the benchmark 10-year US Treasury bond US10YT = RR reached a two-week high of 0.5870%.
Up and up
Overnight, after negotiations between the White House and senior Democrats on a new stimulus package broke down, and Trump signed an executive order to partially restore unemployment benefits, Wall Street gained some support.
The Dow Jones Industrial Average rose 1%, the S&P 500 .SPX index rose slightly, and the Nasdaq .IXIC fell a bit because investors cut some high-tech stocks to support value stocks.
Currently, the S&P 500 index is less than 1% below the record high in February, and in Asia, the MSCI (except Japan) index is less than 2% from the January record high.
This move has pushed valuations in Asia to alarming highs, about 20% higher than the post-financial crisis average. But Jim McCafferty of Nomura in Hong Kong says the dramatic change in investor preferences justifies this lofty level.
He said: “The composition of the stock market index in the entire region has undergone tremendous changes.” “Oil, telecommunications companies and banks used to dominate…now it is the Internet and technology.”
S&P 500 futures ESc1 rose 0.23%, and oil prices were firm. The market hopes that the US may reach a stimulus plan and the expectation of rising demand in Asia. [O/R]
The price of Brent crude oil futures rose 0.47% to $45.20 per barrel; the price of US crude oil futures rose 0.76% to $42.26.
The risk-sensitive Australian dollar and New Zealand dollar rose about 0.5% each. The gains of other major currencies against the US dollar were small, while the yen fell slightly.
The euro was latest at 1.1751 US dollars against the US dollar, and the Japanese yen was at 106.06 against the US dollar. [FRX/]
Chinese credit data will expire this week, while the UK labor data and German confidence survey will be released at 0830 and 0900 GMT respectively, which will provide the latest data on the recovery in Europe.
Investors predict that the unemployment rate in the UK will reach 4.2% in June, and the German economy will remain basically stable.
Reporting by Kane Wu in Hong Kong and Tom Westbrook in Singapore, and Lawrence Delevigne in Boston; editing by Sam Holmes, Richard Pullin, and Lincoln Feast.