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Asian stocks at 6-week highs awaiting Fed and US GDP

For Swati Pandey

SYDNEY, Apr 26 (Reuters) – Asian stock markets rose to six-week highs on Monday on signs that the global economic recovery remains on track, although rising COVID-19 cases in the region weighed on sentiment in investors, pushing oil prices lower.

Futures for the Eurostoxx 50 were flat, as were those for the German DAX, while futures for the London FTSE pointed to a lower open. S&P 500 E-minis futures were barely changing.

The mood was relatively upbeat in Asia, where the MSCI Asia Pacific Stock Index excluding Japan peaked since March 18, despite late-session sales in Chinese stocks.

“Markets have viewed the pandemic as a sprint rather than a marathon. This premise could be affected in the coming weeks,” said Jeffrey Halley, Senior Market Analyst for Asia-Pacific at OANDA.

Fears that rising COVID-19 cases in India will reduce fuel demand at the world’s third-largest oil importer pressed oil prices on Monday, which fell about 1% last week. [O/R]

China’s CSI 300 Index fell 0.7% after hitting its highest since April 6 early in the session. Australia’s benchmark equity index was down 0.2% on a holiday in five of the country’s eight states and territories.

South Korea’s KOSPI stock index rose 0.7%, while New Zealand stocks rose 0.6% and the Japanese Nikkei reversed early losses for the day to rise 0.4%.

So far, risk assets like equities have performed well, with the MSCI ex-Japan index on track for a third consecutive year of positive returns. Since April 2020, the index has delivered positive returns in all but three months.

Recent data pointing to a strong global economic recovery has bolstered confidence in risk assets.

Manufacturing activity indicators for early April, released last week, pointed to a strong start to the second quarter, with data hitting all-time highs in the United States and signaling the end of the double recession in Europe.

According to analysts, first-quarter US gross domestic product (GDP) data, to be released this week, will show that activity has likely returned to pre-pandemic levels.

“We estimate that the economy will close the output gap and rise above its potential in the second half of this year,” the ANZ economists wrote in a note, suggesting a greater ability to travel for stocks.

Europe “cannot match this, but as 2021 progresses to 2022, the growth differential with the US will narrow.”

That said, some economists say the market could hit a slump in the coming months as a result of concerns ranging from rising COVID-19 cases to concerns that most of the benefits from massive public fiscal stimulus have already been discounted ..

“In other words, this may be the last quarter in which companies can avoid being penalized for not seeing revenue recover quickly and / or for not providing forward-looking projections,” JPMorgan analysts wrote in a note.

Strong recent macroeconomic data prompted bond sales, although 10-year Treasury yields were not far from their recent six-week low on expectations that the US Federal Reserve will continue to pursue accommodative monetary policy in its wake. meeting this week.

As for currencies, the Turkish lira fell, widening its recent decline and approaching a record low, as relations with the United States cooled and after the new head of the Turkish central bank signaled that rate hikes would hurt the economy. .

The US dollar index fell to 90.679 against a basket of major currencies, a level not seen since March 3.

The greenback weakened a bit against the safe Japanese yen at 107.80. The euro was up 0.1% at $ 1.2105. The risk-sensitive Australian dollar was trapped in a narrow trading range at $ 0.7766 at the time of writing.

In terms of commodities, US crude was down 73 cents at $ 61.41 a barrel and Brent was down 78 cents at $ 65.33.

Gold was up 0.1% at $ 1,779.19 an ounce.

(Edited by Sam Holmes; Translated by Darío Fernández)

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