Asian stocks start week steady after strong quarter, US policies in focus

A pedestrian walking past an electronic stock indicator flashing the morning closing rate of the Tokyo stock market in Tokyo on March 28, 2017.
A pedestrian walking past an electronic stock indicator flashing the morning closing rate of the Tokyo stock market in Tokyo on March 28, 2017.PHOTO: AFP

TOKYO (REUTERS) - Asian shares started the week on a steady footing on Monday (April 3) after a bumper quarter as investors look to the shape of US trade and economic policies and how they could affect global growth.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trade while Japan's Nikkei rose 0.1 per cent.

Ex-Japan Asia MSCI had gained 12.3 per cent in the last quarter, its biggest quarterly gains in 6½ years and almost double the 6.4 per cent rise in MSCI's broadest gauge of the world's stock markets covering 46 markets.

The rally was primarily underpinned by signs of a pickup in momentum in the global economy, led by China.

South Korea's trade data for March released over the weekend added to the evidence of an improving global demand outlook, with the country's exports rising more than expected.

While a private survey on China's manufacturing on Saturday came in below market expectations it still showed a healthy expansion after a similar survey by the government on Friday pointed to strong growth in the sector.

The main focus for markets this week centres on US payrolls figures due on Friday.

"If we get strong reading in US payrolls data, the markets will try to price in a rate hike in June," said Minori Uchida, chief currency strategist at the Bank of Tokyo-Mitsubishi UFJ.

On the other hand, investors are on guard against the possibility the US administration may adopt protectionist measures.

President Donald Trump sought to push his crusade for fair trade and more manufacturing jobs back to the top of his agenda on Friday by ordering a study into the causes of US trade deficits and a clampdown on import duty evasion.

The executive orders came a week after Mr Trump's promise to replace Obamacare imploded in Congress and a week before he meets Chinese President Xi Jinping in Florida, a summit that promises to be fraught with trade tensions.

"After his failure to push through his healthcare reforms, investors increasingly think that his tax reforms will take time. And given the China-US summit, trade issues could come to the fore this week," said Masahiro Ichikawa, senior strategist at Mitsui Sumitomo Asset Management.

Any hints that Washington may name some of its trade partners such as China, Japan and Germany, as currency manipulator could dent the dollar.

"The Trump administration is not necessarily seeking to reduce trade deficit through a cheaper dollar. But it has strong intentions to do that and it could use a weaker dollar as a bargaining tool in trade negotiation," said Uchida of the Bank of Tokyo-Mitsubishi UFJ.

In early trade, the US dollar slipped 0.2 per cent to 111.20 yen. Uchida said it could fall below its four-month low of 110.10 yen touched last Monday.

The euro ticked up 0.2 per cent to US$1.0673, rebounding from Friday's two-week low of US$1.0651 hit after data had shown inflation in the currency bloc had slowed by far more than expected in March.

Oil prices stood near three-week highs on a growing sense that Opec and non-member Russia would extend their production cut, seeking to drive the market higher.

Brent crude futures hit a three-week high of US$53.63 per barrel early on Monday and last stood at US$53.43, down 0.2 per cent from US close.