Asian stocks edge up as US dollar regains traction
Mood brightens after congressional negotiators agree on package to prevent US govt shutdown
TOKYO Asian stocks shook off a sluggish start and edged up yesterday, with Japan outperforming on upbeat earnings, while the dollar regained traction as the US government avoided a shutdown.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.1 per cent. Japan's Nikkei climbed 0.4 per cent, with high-tech blue chips gaining on strong earnings.
Asian shares initially took their cue from Wall Street, which dipped on Friday after data showed the US economy grew at its weakest pace in three years in the first quarter.
The mood brightened slightly, however, on news that US congressional negotiators hammered out a bipartisan agreement on a spending package to keep the federal government funded through Sept 30, thus averting a government shutdown.
Pointing to a higher open for the main market later in the day, S&P mini futures gained about 0.1 per cent while the safe-haven US 10-year Treasury yield rose after three successive days of declines.
Overall reaction was still limited as many markets in Asia and Europe are closed for Labour Day. "It is hard for markets to make big moves with holidays in so many places today, and people are just waiting for more information to come out," said Ms Harumi Taguchi, principal economist at IHS Markit in Tokyo.
While US consumer spending has almost stalled, a surge in business investment and wage growth suggested activity would regain momentum as the year progresses, limiting Wall Street losses.
Moreover, strong earnings have kept the US equity market at or near record levels. "The main focus of the broader markets this week will be on the United States, with the Fed's May 2-3 policy meeting and the jobs report on Friday," said Sumitomo Mitsui Asset Management's senior strategist Masahiro Ichikawa.
"While many of the indicators in the first quarter were weak, the jobs data could confirm that labour market conditions continue to improve and lift the dollar and US yields."
FAZED
Asian markets were little fazed by China's official manufacturing survey on Sunday which showed growth in the country's factories slowed more than expected in April to a six-month low.
As trading resumed yesterday, the safe-haven yen initially rose against the dollar in response to Saturday's missile test by North Korea.
But the dollar gradually regained traction after the knee-jerk reaction to the missile test faded.
- REUTERS
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