Asian stocks rally with oil before factory daya while yen drops
TOKYO, Dec 1 — Asian stocks rebounded ahead of manufacturing data expected to provide investors with some insight into the global economy ahead of key policy decisions out of Europe and the US this month. Copper futures and crude oil also rallied, while the yen retreated.
Factory gauges are due from China to Japan, the euro area and the US, with the prospect of a divergence in global monetary policy before the end of 2015 weighing on stocks globally in November, while bolstering the greenback. Both Australia and India are expected to keep interest rates on hold today after cutting them early in the year. The yuan held gains after the IMF said it will be classed as a reserve currency.
There’s much for traders to analyze this week, with the manufacturing purchasing managers’ indexes first up, ahead of a euro-area monetary policy decision on Thursday and an address by Federal Reserve Chair Janet Yellen to Congress. The payrolls report due Friday is seen as the most important piece of US data to come out before the Fed reviews rates on December 16. The International Monetary Fund’s decision, which will see the yuan admitted to its Special Drawing Rights basket in October next year, is being viewed as a sign of China’s long-awaited integration into the global economic system.
“The next few weeks provide somewhat of a banquet of key central bank decisions that will certainly help shape markets well into 2016,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. The “global manufacturing activity surveys should keep risk capped — China is expected to remain in contraction and risks are to the downside for the US”
Stocks
The MSCI Asia Pacific Index rose 0.8 per cent by 9.53am in Tokyo, after sliding 1 per cent last session to cap its sixth monthly decline since May. Standard & Poor’s 500 Index futures climbed 0.5 per cent after the US benchmark slipped 0.5 per cent yesterday to almost wipe out its monthly advance.
In Japan, the Topix index added 1.1 per cent after gaining 1.4 per cent in November, as the Kospi index in Seoul climbed the same amount. Australia’s S&P/ASX 200 Index rallied 1.7 per cent — led by telephone and consumer stocks — after capping a 1.4 per cent drop in November.
Futures on the Hang Seng Index in Hong Kong climbed 0.9 per cent with those on the Hang Seng China Enterprises Index, a measure of mainland equities listed in the city. FTSE China A50 Index were also higher in recent trading, rising 0.9 per cent, after a rebound in Shanghai-traded shares yesterday. The biggest US exchange-traded fund tracking Chinese stocks rallied 2.3 per cent last session, after sliding 7.3 per cent on Friday.
Private and official Chinese manufacturing PMIs are due Today, along with gauges on the services sector. Caixin’s China factory index has held below 50 — the threshold between expansion and contraction — since March, a symptom of the slowdown in Asia’s largest economy that has roiled financial markets all year. Economists surveyed by Bloomberg are predicting the index will hold at 48.3.
“Eyes today will be on” China’s data, said Stephen Halmarick, Sydney-based head of economic and market research at Colonial First State Investment Ltd., which oversees about US$150 billion (RM635.92 billion). “If the forecasts arrive as expected, people will be happy on some signs of stability. Clearly a number below that would be a concern.”
Currencies
The yen, often regarded as a haven investment, slipped 0.1 per cent against the dollar and 0.2 per cent versus the euro.
Australia’s dollar climbed 0.2 per cent to 72.43 US cents after strengthening 0.5 per cent Yesterday to swell its November advance. The country’s Reserve Bank is tipped to keep rates at a record-low 2 per cent Today, and data on building approvals and manufacturing performance is also due. Its New Zealand counterpart added 0.3 per cent.
One-month non-deliverable forwards on India’s rupee climbed 0.2 per cent to 66.88 per dollar in early trading after data Yesterday showed India’s economy grew 7.4 per cent in the July-to- September period from a year earlier, exceeding predictions for growth of 7.3 per cent. The report bolstered speculation the central bank will hold rates after cutting them this year by the most since 2009.
The Bloomberg Dollar Spot Index, a gauge of the US currency against 10 major peers, was little changed after posting a 2.3 per cent increase in November. The greenback has seen support as odds of the Fed raising rates this month hold above 70 per cent.
Conversely, the euro traded at US$1.0566, close to its weakest level since April, with economists unanimously predicting an expansion in economic stimulus from the ECB this week.
The yuan was little changed at 6.4303 per dollar in Hong Kong after rising 0.2 per cent yesterday. The IMF’s executive board, which represents the fund’s 188 member nations, decided that the yuan meets the standard of being “freely usable” and will join the dollar, euro, pound and yen in the SDR basket, the organization said Yesterday in a statement.
Commodities
West Texas Intermediate crude oil rose 0.3 per cent to US$41.78 a barrel after falling 0.1 per cent last session to cap its worst monthly performance since July.
OPEC, which will gather Dec. 4 in Vienna, pumped 32.12 million barrels a day last month, according to a Bloomberg survey of oil companies, producers and analysts. That’s the 18th month above its target. US crude stockpiles probably declined for the first time in 10 weeks, a separate Bloomberg survey shows before inventory data tomorrow. — Bloomberg
