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Markets Update am

 

  • Asian stocks at two-month lows as oil weighs;
  • dollar up
  • European stocks gain ground

  • Banks and resources groups rally as commodities firm

European and US equity gauges are higher as steady inflation numbers out of Beijing help quell concerns about the health of China’s economy, while a weaker yen again buoyed Japan’s stock market.

Asian stocks slipped to two-month lows on Tuesday as weak oil prices weighed on sentiment while the dollar got a lift against its peers as the differences in policy directions between the world’s top central banks became starker.

MSCI’s broadest index of Asia-Pacific shares outside Japan  was down 0.2 percent, its lowest since Mar. 11. Hong Kong and Chinese stocks led regional markets lower.

China’s April consumer inflation and producer price data painted a mixed picture of deflationary pressures in the world’s second largest economy.

Global investors have been concerned that a slowing Chinese economy would export deflationary pressures, so the figures are taken as a promising sign by many analysts.

However, Hao Zhou, an economist at Commerzbank, was of the view that “the acceleration of PPI inflation in the past two months is largely due to surging steel prices pushed up by speculative flows, rather than improving demand”.

Expectations of further monetary policy easing had already been dented by strong March China data, but economists are divided over whether that was just a blip or a more sustainable trend.

In the Philippines, the main index .PSI initially fell as tough-talking mayor Rodrigo Duterte looks almost certain to become the country’s next president, but then reversed to be up 0.5 percent.

US index futures point to the S&P 500 gaining 0.6 per cent to 2,073, as the pan-European Stoxx 600 rises 1.1 per cent at the open, helped by well-received results from Credit Suisse.

Traders are shrugging off news that Germany’s industrial output fell for the second month in a row, leaving the euro up 0.1 per cent at $1.1394 and benchmark 10-year Bund yields also barely changed at 0.14 per cent.

Bund yields are hovering only several basis points above record lows as investors price in continued ultra-accommodative policy from the European Central Bank.

A stronger buck tends to pressure dollar-denominated raw material prices, but after falling sharply in recent sessions some commodity benchmarks are attracting buyers.

Brent crude is gaining 1.4 per cent to $44.23 a barrel and London-traded copper is leading the base metals space with a 0.4 per cent gain to $4,707 a tonne.

Gold is up $4 at $1,267 an ounce after falling $24 on Monday.

Malaysia’s ringgit, which has been sensitive to moves in Asian commodity prices, was the worst performer among currencies in the region, down 1.1 per cent.

Developed economy commodity currencies were more chipper, with the Aussie and Canadian dollars a touch firmer.

The Japanese yen is down 0.4 per cent to ¥108.75 per dollar, and its retreat from last week’s 18-month high of ¥105.52 is giving a boost to the Tokyo stock market. The exporter-sensitive Nikkei 225 rose 2.2 per cent.

 

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