Asian shares held two-month highs yesterday as Chinese data showed the economy slowing, while still managing to reassure investors it was not in danger of a hard landing.
Adding to optimism were growing bets that the US Federal Reserve is likely to delay its first rate hike since 2006 until next year, encouraging investors to hunt for bargains in beaten-down Asian equities.
The US dollar slipped as investors took profits.
Photo: Reuters
While China’s quarter growth data last month was its weakest since the global financial crisis of 2008, it was still better than market expectations — indicating that recent stimulus measures were having an impact.
MSCI’s broadest index of Asia-Pacific shares outside Japan bounced around in a tiny range yesterday in the wake of the China data.
It was last up 0.1 percent and on track for its best monthly performance since February 2012.
European stocks are expected to open broadly flat-to-higher lacking fresh data and taking cues from a sluggish Asian session.
Japanese shares edged 0.5 percent lower, while Australia’s rose 0.1 percent. Greater China shares were having a mixed day with mainland stocks rising 0.5 percent, while Hong Kong shares slipped 0.3 percent.
“The GDP data is better than anticipated. It could mean that previously announced stimulus, such as infrastructure investments, is beginning to work,” Kaiyuan Securities strategist Yang Hai said.
“The market is turning optimistic, against a backdrop of ample liquidity,” Hai said.
In another encouraging sign for Asian equities, Bank of America Merrill Lynch flow data indicated that emerging market equity funds saw inflows from the first time in three months.
Within Asia, investors have piled into the more cyclical sectors such as industrial, consumer discretionary and information technology shares at the expense of staples and healthcare sectors in recent days, indicating renewed investor optimism.
The CBOE Volatility Index, often seen as a gauge of investors’ fears in Wall Street shares, fell to a two-month low of 15.05 percent.
“Compared to some time ago, more people think things are starting to look up. Yet there remain concerns on the outlook for the global economy,” JPMorgan Asset Management global market strategist Yoshinori Shigemi said.
In foreign exchange trade, the US dollar held firm against a basket of six other major currencies, after US industrial production data and as the euro and the yen were capped by speculation of more money printing.
The US dollar’s index was at 94.665, on track to extend its rebound from its seven-week low of 93.806 on Thursday.
The euro was at US$1.1363, little changed on the day, but off Thursday’s high of US$1.1495.
The yen traded at ¥119.42 to the US dollar, off its seven-week peak of 118.065.
In commodities, prices stabilized after a recent rise as investors took profits from recent gains.
Oil prices edged up in early trade yesterday, extending a rebound on Friday after almost a week of declines.
Brent futures were US$50.27 per barrel, up 0.3 percent from late US levels last week. The 19-commodity Thomson Reuters/Core Commodity CRB Index edged higher.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his