Asian stock markets are higher due to pandemic recovery signals

© Reuters. FILE PHOTO: A passerby wearing a protective face mask appears on the screen showing the Japanese yen versus the US dollar exchange rate and stock prices at a broker during the coronavirus disease (COVID-19) outbreak in Tokyo

Posted by Scott Murdoch

HONG KONG (Reuters) – Asian stock markets performed marginally on Tuesday as investors looked for signs of recovery from the coronavirus pandemic as major economies around the world re-opened.

MSCI’s broadest index for stocks in the Asia-Pacific region outside Japan was just 0.15% higher than in the afternoon Asian session of trading, which was diluted by holidays in China and Japan. Hong Kong was trading 0.3% higher at 28,441.95.

The Australian S & P / ASX200 rose 0.4% to 7,056.3 ahead of the Reserve Bank of Australia meeting, where the official rate is expected to be held at 0.1%, amid further signs of a recovery in the domestic economy from the Pandemic expected downturn.

A statement following the 4:30 GMT decision will be monitored for signs of whether the unprecedented quantitative easing program there may be tapering.

The mildly positive tone in Asia largely coincided with that on Wall Street overnight, where positive gains, news of city reopening and a reluctant Federal Reserve helped offset a disappointing report on manufacturing activity.

While that combination also causes investors to position themselves for stocks to defy the common saying “sell in May,” they are ahead of key US services dates due Wednesday and payroll numbers got cautious outside farming on Friday.

“Dovish tones from the Fed and an exceptional fiscal stimulus from the Biden administration fuel optimism that the US economy will continue to strengthen in 2021,” said Stephen Koukoulas, managing director of Canberra-based Market Economics.

“Attention is also shifting US payroll data this Friday, where nearly 1 million new payrolls and an unemployment rate of 5.6% again will add to that positive sentiment.”

Taiwan was an exception in the region as inventories fell more than 3% after a sudden surge in coronavirus infections in what is possibly the worst session since February 26. The index rose by around 12.8% over the course of the year, making it one of the strongest performing markets in the region.

Alex Huang, manager of Mega International Investment Services Corp., said the declines were due to concerns about a surge in domestic COVID-19 infections in Taiwan and the decline in US technology stocks overnight.

“The pandemic situation is a bit complex really, and the decline in US technology stocks has been a burden too,” said Huang, from Taipei.

Markets in Japan and mainland China remained closed for public holidays on Tuesday, which dampened trade in the region.

At Monday’s session on Wall Street, the close rose 0.7% to 34,113.23 points, while the gain rose 0.27% to 4,192.66 points, with most gains focused on industrial and commodity stocks.

The sectors, declining as technology stocks, viewed by investors as benefiting from a pandemic rebound.

Energy stocks also gained due to higher oil prices.

In the Asian session, trading rose 0.12% to $ 67.64 while US crude oil rose 0.12% to $ 64.56.

“Won (in US trade) as the easing of restrictions in the US and Europe, raises hopes for stronger demand. The European Union plans to relax restrictions on vaccinated travelers in the summer,” said ANZ economists in a statement to the customers.

“This is because several countries are emerging from lockdowns due to a decline in new coronavirus infections.”

US Treasury bond yields fell Monday after data showed manufacturing activity growth slowed in April amid supply chain challenges and despite the Treasury Department’s announcement of a much larger lending program for the second quarter.

The 10-year benchmark return, which hit a session low of 1.578%, recently fell 3 basis points to 1.6011%, well below the 14-month high of 1.776% reached on March 30.

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