EghtesadOnline: Asian stocks climbed outside of China, with Japanese shares rallying after a three-day holiday, amid optimism on improving global growth following Emmanuel Macron’s victory as France’s next president.
Japan’s Topix index rose to the highest level since December 2015, leading an advance across the region after U.S. stocks closed at a record Friday on better-than-forecast data on American jobs. Chinese equities extended declines that have wiped more than $400 billion from the value of local shares. The euro erased early gains to retreat, with investors having largely positioned for Macron’s victory in the run-up to Sunday’s vote. Oil extended a rebound while gold climbed, according to Bloomberg.
“It’s steady as she goes in terms of the risk-on trade again,” Dwyfor Evans, head of Asia-Pacific macro strategy at State Street Global Markets in Hong Kong, told Bloomberg TV. “It’s a very good outcome for risk generally.”
With the hurdle determining France’s new leader now cleared, investors are turning their focus on global growth and corporate earnings, after last week’s robust American jobs report and Federal Reserve comments bolstered optimism in the U.S. economy.
In China, domestic equities and bonds are being hit by the government’s steps to rein in financial leverage. The country’s banking, insurance and securities regulators have all played a part in the clampdown, focusing much of their attention on the nation’s shadow banking system. The selloff that began last month continued Monday even amid data showing China’s overseas shipments held up in April.
Here’s what investors will be watching this week:
- The annual Sohn Investment Conference is held in New York City, where top Wall Street investors including David Einhorn and Bill Ackman will share their insights with portfolio managers, asset allocators and private investors.
- Fed official Loretta Mester speaks on the U.S. economy in Chicago and James Bullard participates in a panel discussion in Atlanta on Monday. Central bank policy makers left interest rates unchanged last week, indicating that a disappointing first quarter wouldn’t stop them from raising rates twice more in 2017 following a hike in March.
- South Korea heads to the polls on Tuesday to elect a new president following the ouster of Park Geun-hye in a corruption scandal. Polls show former opposition leader Moon Jae-in, who favors a softer touch on North Korea, well ahead of centrist Ahn Cheol-soo.
- Earnings this week include results from Walt Disney Co., Mitsubishi Corp., Toyota Motor Corp. and Deutsche Telekom AG.
Here are the main moves in markets:
- The Topix index rose 2.2 percent as of 1:08 p.m. in Tokyo, the most since Feb. 10. The gauge is at the highest since December 2015, surpassing a peak reached in March.
- Hong Kong’s Hang Seng advanced 0.3 percent and Australia’s S&P/ASX 200 Index gained 0.6 percent. South Korea’s Kospi index added 0.6 percent ahead of tomorrow’s election.
- The Shanghai Composite Index dropped 0.9 percent, poised for the lowest closing level since October. China’s overseas shipments held up in April, edging down from a two-year high in March. The export outlook has improved on recovering global demand and as the threat of a trade war with its biggest trading partner fizzled.
- Futures on the S&P 500 were little changed. The benchmark gauge climbed 0.6 percent last week, closing Friday at an all-time high.
- The euro fell 0.3 percent to $1.0971, after gaining as much as 0.2 percent earlier. The currency is still trading near the highest level since November.
- The yen was little changed at 112.75 per dollar, near the lowest level in seven weeks.
- The Bloomberg Dollar Spot Index advanced 0.1 percent following four straight weeks of declines.
- The yield on 10-year Treasury notes rose one basis point to 2.36 percent. Yields on Australian government debt with a similar maturity climbed three basis points to 2.68 percent, extending a two-week slide in prices.
- Oil rose 1.4 percent to $46.86 a barrel after touching a five-month low last week. Crude is extending a rebound as analysts from Goldman Sachs Group Inc. and Citigroup Inc. said the tumble wasn’t based on fundamental factors, but rather technical trading. OPEC’s output cuts will likely be extended through the second half of this year and possibly into 2018, said Saudi Oil Minister Khalid Al-Falih.
- Gold climbed 0.2 percent to $1,230.46 an ounce. The metal fell 3.2 percent last week.