Asian stocks rise on tech gains

Federal Reserve Bank of San Francisco president John Williams has made the case for further gradual interest rate increases, saying he expects inflation to rise to the central bank's 2 per cent target next year.
Federal Reserve Bank of San Francisco president John Williams has made the case for further gradual interest rate increases, saying he expects inflation to rise to the central bank's 2 per cent target next year.PHOTO: REUTERS

Weak US data could cloud trading despite oil's recovery

SYDNEY • Asian stocks advanced yesterday as technology shares continued a recovery and oil climbed for a third straight session after last week's bear market.

But weak US data out last night could cloud the outlook for markets today. Durable orders in the United States fell more than expected in May by 1.1 per cent overall - the biggest fall since November.

Yesterday, equities from South Korea to Hong Kong rose as crude futures held above US$43 a barrel. 

Technology shares had the biggest advance in the MSCI Asia Pacific Index. European equity futures pointed higher, with Nestle poised to rise after being targeted by activist investor Dan Loeb.

The yen was little changed against the US dollar. The pound rose for a fourth day amid Brexit negotiations by British Prime Minister Theresa May.

An absence of catalysts over the weekend left investors awaiting clues from central bankers on policy paths for some of the world's biggest economies. Federal Reserve Bank of San Francisco president John Williams made the case yesterday for further gradual interest rate increases, saying he expects inflation to rise to the central bank's 2 per cent target next year as unemployment edges lower.

An absence of catalysts over the weekend left investors awaiting clues from central bankers on policy paths for some of the world's biggest economies.

Markets were gripped last week by a plunge in oil while equities, the greenback and Treasuries all made little headway. Global stocks remain near all-time highs, with the Bloomberg Dollar Spot Index on course for its first back-to-back quarterly declines in three years as investors question the inflation outlook. With Bank of Japan governor Haruhiko Kuroda also speaking at the European Central Bank forum, the heads of key central banks have the chance this week to shape discussion by offering more clues on future policy.

There is "very little risk we see any central bank surprises", Mr Robert Rennie, Sydney-based head of global market strategy at Westpac Banking, said. "It looks like it's a positive summer for risk sentiment. That certainly favours higher equity and higher yielding currencies at least in the very short term."

Economic data may also drive momentum in financial markets, with key reports due on inflation, jobs, manufacturing and housing from China to the United States.

Singapore, India, Malaysia, Indonesia and the Philippines were closed yesterday.

US spending data this week may reveal consumers are only moderately rebounding and the inflation backslide is continuing - two things which suggest central bankers should feel little need to rush, according to Bloomberg Intelligence. Durable goods orders yesterday were expected to show a 0.6 per cent decline, as lack of details surrounding tax and trade reform cause reduced order activity.

China's PMI might have declined in June after unexpectedly remaining unchanged in May, reflecting government offers to cut overcapacity and leverage. The official manufacturing measure is estimated to have dropped to 51 from 51.2.  Also due this week: Japanese inflation, factory output, unemployment, household consumption and housing starts.

Japan's Topix rose less than 0.1 per cent. South Korea's Kospi rose 0.4 per cent to all-time closing high.

Hong Kong's Hang Seng Index added 0.5 per cent and the Hang Seng China Enterprises Index advanced 0.7 per cent. The Shanghai Composite Index gained 0.8 per cent while Taiwan's Taiex jumped 1.3 per cent to the highest level since 1990.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 27, 2017, with the headline 'Asian stocks rise on tech gains'. Print Edition | Subscribe