Asia shares turn mixed as volatile quarter comes to an end; STI up 1.8%

Japan's Nikkei edged up 0.5 per cent and South Korea 1.8 per cent. PHOTO: EPA-EFE

SYDNEY (REUTERS, BLOOMBERG) - Asian shares turned mixed on Tuesday afternoon (March 31) and US equity futures swung to a loss as a volatile quarter for global financial markets came to an end.

S&P 500 futures erased gains after hitting their highs on Tuesday morning on a stronger-than-anticipated China manufacturing index even as other countries across the globe all but shut down.

China's official manufacturing purchasing managers' index (PMI) bounced to 52.0 in March, up from a record-low 35.7 in February and topping forecasts of 45.0.

Analysts cautioned the index could overstate the true improvement as it measures the net balance of firms reporting an expansion or contraction in activity. If a company merely resumed working after a forced stoppage, it would read as an expansion without saying much about the overall level of activity.

Gains were modest at best with Shanghai blue chips up 0.2 per cent and South Korea up 1.7 per cent. Japan's Nikkei eased 1.1 per cent, to be down more than 20 per cent since the start of the year.

Singapore shares pared stronger gains in the morning, with the Straits Times Index up 1.8 per cent as 1:23pm local time. The index lost 4.5 per cent on Monday.

Australia's S&P/ASX 200 Index reversed a surge of over 3 per cent to trade down 3 per cent.

E-Mini futures for the S&P 500 edged up 0.1 per cent, supported by end of month book-keeping demand. EUROSTOXX 50 futures rose 0.7 per cent and FTSE futures 0.3 per cent.

Singapore shares pared strionger gains in the morning, with the Straits Times Index up 1.8 per cent as 1:23pm local time. The index lost 4.5 per cent on Monday.

Australia's S&P/ASX 200 Index surged 3.3 per cent, adding to Monday's 7 per cent rally, its their biggest single-day jump in history, on a A$130 billion (S$113.8 billion) aid package.

E-Mini futures for the S&P 500 added another 0.6 per cent, supported by talk of book-keeping demand.

"It's month-end rebalancing, whereby balanced funds now underweight equities versus fixed income given this month's valuation destruction, need to buy stocks to get back into balance," analysts at NAB said.

Healthcare had led Wall Street higher, with the Dow ending Monday up 3.19 per cent, while the S&P 500 gained 3.35 per cent and the Nasdaq 3.62 per cent.

News on the coronavirus remained grim but radical stimulus steps by governments and central banks have at least provided some comfort to economies.

Infections in hard-hit Italy slowed a little, but the government still extended its lockdown to mid-April. California reported a steep rise in people being hospitalised, while Washington state told people to stay at home.

Trade ministers from the Group of 20 major economies agreed on Monday to keep their markets open and ensure the flow of vital medical supplies.

OIL PRICES OVERWHELMED

Portfolio management also played a part in the forex market where many fund managers found themselves over-hedged on their US equity holdings given the sharp fall in values seen this month, leading them to buy back dollars.

That saw the euro ease back to US$1.1020, from a top of US$1.143 on Monday, while the dollar index bounced to 99.303 , from a trough of 98.330.

Month-end demand for dollars from Japanese funds saw the dollar inch up to 108.45 yen, though it remained some way from last week's peak at 111.71.

Oil prices steadied, after diving to the lowest in almost 18 years on Monday as lockdowns for the virus squeezed demand even as Saudi Arabia and Russia vied to pump more product.

US crude added US$1.13 to US$21.22, while Brent crude futures gained 45 cents to US$23.21 a barrel.

In a new twist, US President Donald Trump and Russian President Vladimir Putin agreed during a phone call on Monday to have their top energy officials meet to discuss slumping prices.

"However, the reality is that the level damage to demand is likely to overwhelm any production cut agreement between major producers," wrote analysts at ANZ in a note.

"The lockdown of cities around the world and the shutdown of the aviation industry will cause a fall in demand the industry has never seen before."

Prices did at least try and steady early Tuesday, with US crude up 56 cents to US$20.64. Brent crude futures gained 25 cents to US$23.01 a barrel.

In the gold market all the talk has been of a rush of demand for the physical product amid shortages in coins and small bars. Flows into gold-backed ETFs have ballooned by US$13 billion so far this year, the most since 2004.

The metal was holding at US$1,615 an ounce, well up from a low of US$1,450 touched early in the month.

Join ST's Telegram channel and get the latest breaking news delivered to you.