Asia Stocks Edge Higher; Oil Gains for Eighth Day

Asian stocksA man on a bicycle looks at an electronic stock board of a securities firm
  • Asia Stocks Edge Higher; Oil Gains for Eighth Day

Asian stocks were mostly higher in light trading, while the dollar strengthened after its worst start to a year since 2006. Oil extended the longest winning streak of 2017.

Japan’s Topix rose as a survey showed confidence grew among manufacturers, while the yen erased an early advance sparked by the ruling party’s defeat in Tokyo elections. Stronger Chinese data failed to spur gains among Shanghai shares. The first day of China’s new bond link to the rest of the world started on Monday, with little in the way of a market reaction. Trading volumes were light before a U.S. holiday as investors awaited Friday’s report on the American jobs market.

“Stocks are showing little reaction to Japan’s election as markets wait and see whether the result will have any impact on a national political level,” said Koji Fukaya, chief executive officer at Tokyo-based FPG Securities. “The focus this week is U.S. data, whether they will support the Fed’s hawkish view.”

Central banks stole the limelight last week as a more hawkish tilt spurred some reassessment from investors on policy steps. Attention now turns to a swathe of manufacturing reports. A private gauge of China’s manufacturing exceeded estimates in June, adding to evidence that the economy is maintaining some momentum after a strong start to the year. Japan’s Tankan survey showed confidence among large manufacturers improved for a third straight quarter.

With global equities trading near a record high on bets of improving growth, stocks continue to be one of the best-performing assets this year, with emerging-market shares soaring in the first six months of 2017. History shows the dollar may be in for further pain after dropping more than 6 percent in the first half, while the euro remains the strongest major currency this year on bets a recovery is broadening.

The yen’s reaction was muted after Japan’s ruling party lost to an upstart outfit in an election for Tokyo’s assembly, presenting Prime Minister Shinzo Abe with one of his biggest tests since coming to power in late 2012. Haruhiko Kuroda shouldn’t serve another term as governor of the Bank of Japan because the central bank will need fresh ideas as it moves toward exiting years of unprecedented monetary easing, according to an adviser to the prime minister.

Here are some key upcoming events:

  • The New York Stock Exchange closes early on Monday, at 1 p.m. local time, ahead of the Independence Day holiday on July 4.
  • The Federal Reserve on Wednesday releases the minutes from its June 13-14 policy meeting, at which officials raised interest rates.
  • German Chancellor Angela Merkel hosts a two-day G-20 summit in Hamburg beginning Friday. President Donald Trump will attend and is expected to hold his first meeting with Russia’s Vladimir Putin on the sidelines.
  • American employers probably added around 175,000 workers in June and wage growth probably strengthened, consistent with a solid labor market, economists project the U.S. Labor Department to report on Friday.

Here are the main moves in markets:

Stocks

  • The MSCI Asia Pacific Index was little changed as of 3:38 p.m. in Tokyo. The gauge finished the second quarter with a gain of 5.2 percent.
  • Japan’s Topix index increased 0.2 percent. South Korea’s Kospi index increased 0.1 percent and Australia’s S&P/ASX 200 slipped 0.7 percent.
  • Hong Kong’s Hang Seng added 0.2 percent and the Shanghai Composite climbed less than 0.1 percent. Indonesia’s benchmark index rose 0.6 percent as the market reopened after a week-long holiday. India’s Sensex jumped 1 percent, the most since May.
  • Futures on the S&P 500 advanced 0.2 percent after the underlying gauge rose 0.2 percent on Friday to round out its worst week since April. The U.S. market will be closed Tuesday for the July 4 holiday.

Currencies

  • The yen fell 0.2 percent to 112.54 per dollar, after erasing an earlier advance of as much as 0.4 percent. The Australian dollar and South Korean won lost 0.2 percent.
  • The Bloomberg Dollar Spot Index rose 0.1 percent after dropping 1 percent last week and touching the lowest level since October.
  • The pound fell 0.2 percent to $1.3001, after an eight-day rally. The euro slipped 0.2 percent to $1.1404.

Bonds

  • The yield on 10-year Treasuries rose one basis point to 2.32 percent, adding to a 16-basis point surge last week, the steepest since March.
  • Australian benchmark yields jumped seven basis points to 2.67 percent.
  • French and German 10-year yields rose one basis point.

Commodities

  • Crude rose 0.4 percent to $46.23 a barrel. WTI has rallied 8.7 percent over eight days, after tumbling more than 20 percent from the year’s peak to enter a bear market.
  • Gold slipped 0.4 percent to $1,236.53 an ounce.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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