Asian markets extend gains after strong data, pound holds ground
AFP – Asian investors pressed on with their buying spree Tuesday as they took up the baton from a strong Wall Street rally, cheered by healthy economic data, optimism over China-US trade talks and the prospect of no hike in borrowing costs.
A forecast-beating factory report out of Beijing — which spurred buying across the region Monday — was followed by a similarly positive US reading, tempering worries about the outlook for the world’s biggest and most crucial economies.
Traders are now awaiting the start of the next round of top-level trade talks in Washington, with China and the US noting progress in a meeting last week in Beijing.
A series of olive branch measures from the Chinese side has lifted hopes the two will eventually reach a deal to end their tariffs row, which dragged on equities at the end of 2018.
This week also sees the release of US March jobs data, which are closely watched for an idea about the state of the economy, with the Federal Reserve also using the figures to map its path for monetary policy.
The Fed’s recent dovish lean has helped propel a rally across share markets this year, with other central banks also looking to ease up on their tightening moves.
"Having the central banks take a step back, with the Fed saying that they’re going to pause and that they’re going to be patient at least toward the end of this year, I think that gives the market a little bit of time" to wait for economic data to turn around, said Victoria Fernandez, chief market strategist at Crossmark Global Investments in Houston.
"Is this a bottom, is this a trend that we’re starting to see — an upward trend? If so that’s gonna be positive for all of the markets," she told Bloomberg News.
– Sterling soldiers on –
In early trade Hong Kong edged up 0.3 percent and Shanghai added 0.4 percent while Tokyo finished the morning session 0.3 percent higher.
However, the gains are limited by investors taking a breather after their latest advances.
Sydney put on 0.6 percent, Singapore added 0.4 percent, Seoul climbed 0.3 percent and Wellington jumped 0.7 percent, while Taipei, Manila and Jakarta also rose.
The confident air helped oil prices to extend Monday’s gains of more than two percent, with support also coming from news that OPEC had lowered output while major producer Venezuela’s political and economy crisis deepens.
Forex investors continue to be occupied by the ongoing Brexit drama, with MPs on Monday once again rejecting a series of alternative options to Prime Minister Theresa May’s EU divorce deal, which has already been rejected three times.
Brussels has set an April 12 deadline to agree to the divorce deal, settle on an alternative or crash out of the bloc, which most observers warn will be economically calamitous.
May was to call in her cabinet to discuss the next steps but while investors are averse to uncertainty, there is still hope that parliament will avert a no-deal exit, which is keeping the pound from plunging.
"While no-deal risks grow, the base case remains for the UK to get a longer extension from the EU to start over from scratch," said OANDA senior market analyst Edward Moya.
"May will discuss her options tomorrow in a cabinet meeting, but it appears she may try to push through another attempt of getting her deal across the finish line."
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.3 percent at 21,574.83 (break)
Hong Kong – Hang Seng: UP 0.3 percent at 29,651.06
Shanghai – Composite: Up 0.4 percent at 3,183.20
Pound/dollar: DOWN at $1.3065 from $1.3103 at 2100 GMT
Euro/pound: UP at 85.75 pence from 85.58 pence
Euro/dollar: DOWN at $1.1204 from $1.1213
Dollar/yen: UP at 111.37 yen from 111.35 yen
Oil – West Texas Intermediate: UP 38 cents at $61.97 per barrel
Oil – Brent Crude: UP 39 cents at $69.40 per barrel
New York – Dow: UP 1.3 percent at 26,258.42 (close)
London – FTSE 100: UP 0.5 percent at 7,317.38 (close)