GLOBAL MARKETS-Asia stocks up as China PMI, U.S. data help cap strong quarter despite virus woes

GLOBAL MARKETS-Asia stocks up as China PMI, U.S. data help cap strong quarter despite virus woes

Reuters  | Jun 30, 2020 15:30

GLOBAL MARKETS-Asia stocks up as China PMI, U.S. data help cap strong quarter despite virus woes

* Asian stock markets:
* Equities cheer positive economic data
* Coronavirus surge remains a risk to markets

By Stanley White and Alun John
TOKYO/NEW YORK/HONG KONG, June 30 (Reuters) - Asian shares
advanced on Tuesday as positive economic data from China and the
United States helped to close out a strong quarter, though a
renewed surge in global coronavirus cases underlined a
challenging investment climate.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.51%, on course for its highest
quarterly gain in nearly 11 years.
However, it was not clear whether the optimism would carry
over into European trading, with EUROSTOXX 50 futures STXEc1
losing 0.7%, FTSE futures FFIc1 shedding 0.36%, and E-Mini
futures for the S&P 500 ESc1 down 0.24%.
Asian markets got an early boost after an official survey on
China's vast factory sector showed activity quickened last
month, defying expectations for a modest slowdown. That came on
top of strong U.S. housing market data overnight, which helped
drive up Wall Street stocks despite a worrying surge in
coronavirus cases in the country and around the
world. The Chinese factory data lifted its blue chips .CSI300
which jumped 0.82% to their highest level since mid March.
Still, most analysts cautioned against getting carried away
by the factory data, noting that export orders were still
"The divergence of the domestic recovery and foreign orders
contraction highlights that the Chinese economy remains affected
by the global situation for the Covid-19 pandemic," ING analysts
said in a note.
"As new infection cases globally continue to grow, we
believe that China will continue to face a contraction in export
orders in the coming months."
The headline numbers, however, were enough to cheer markets.
Shares in Australia .AXJO were also up 1.43%, Korea
.KS200 jumped 1% and Japan .N225 rose 1.33%, despite a
larger-than-expected decline in Japanese industrial production.

Hong Kong stocks .HSI tacked on a more modest 0.1%, giving
up much of the sizable early gains as investors came to terms
with the Chinese parliament's passage of a security law that
will increase Beijing's control over the former British colony.

The move has sparked international condemnation and caused
the U.S. to begin steps to remove the territory's special
On the whole, Asia ex-Japan shares were on course for a
17.8% gain in the second quarter, which would be the biggest
quarterly increase since the third quarter of 2009. Stocks
appear to have received an added boost as some investors
adjusted positions on the last trading day of the quarter.
However, despite the bounce and underscoring the scale of
the pandemic-sparked rout earlier this year, the index was still
set for a 7% decline since January 1.
"Overnight moves in markets were not large but one does get
the distinct impression that markets have got it both ways –
with equities rallying on rebounding data and bonds rallying on
dismal COVID-19 news," said ANZ Research analyst Rahul Khare.
The strong housing data boosted the Dow Jones Industrial
Average .DJI up 2.32%, and the S&P 500 .SPX up 1.47%
The yield on benchmark 10-year Treasury notes US10YT=RR
was little changed at 0.6299% in Asia as traders braced for U.S.
non-farm payrolls data on Thursday, which is forecast to show an
improving labour market. However, the yield on U.S. five-year treasuries dropped
slightly to a record low of 0.271%.
U.S. Federal Reserve Chairman Jerome Powell on Monday said
the outlook for the world's biggest economy is "extraordinarily
uncertain" and signalled more monetary stimulus may be
necessary, which could limit gain in yields. A recent resurgence in coronavirus infections had led some
investors to question the strength of a rebound in global
economic activity, with sentiment swinging between hopes and
The bulk of new cases were reported in the United States and
Latin America, stoking fears that the outbreak could stall
economic recoveries just as lockdowns begin to ease.
In currency markets, the dollar was mixed in the Asian
session swinging between small gains and losses against a basket
of currencies.
The greenback was a touch up at 107.64 yen JPY= , having
touched a three-week high of 107.885 in the previous session,
and it was up against the euro at $1.1214 EUR= .
U.S. crude CLc1 fell 0.73% to $39.41 a barrel, while Brent
crude LCOc1 slipped 0.58% to $41.44 per barrel, weighed by
concerns about oversupply after Libya cited progress in resuming
oil exports. O/R

Global assets
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Emerging markets
MSCI All Country Wolrd Index Market Cap

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