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Asia markets gain despite global growth worries
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.84 percent on Tuesday.
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A man walks by an electronic stock board of a securities firm in Tokyo, on June 27, 2016. (Associated Press/Koji Sasahara)
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sian shares edged higher on Tuesday despite data reinforcing investor fears the global economic recovery may be more fragile than expected, even as inflationary pressures remain high.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.84 percent on Tuesday, but is still down 6.7 percent so far this month. US stocks ended the previous session with mild losses.
In Tokyo, the Nikkei was flat in early trade, while in Australia the S&P/ASX200 index gained 0.34 percent.
Hong Kong's Hang Seng Index was 1.2 percent higher and mainland China's CSI300 Index gained 0.07 percent.
The US dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was flat in Asian trade to be at 104.1.
Economic growth fears in the world's two largest economies have re-emerged following weak retail sales and factory production figures in China and disappointing US manufacturing data. .
Investors are also weighing the global inflationary impact of lockdowns in China to combat the coronavirus, which have halted factory production in areas across the country.
"One important way China's lockdowns could impact the rest of the world is through its impact on inflation. After all, inflation – and the central bank response – has been a stiff headwind for global bond and equity markets this year," Capital Economics wrote in a note to clients.
The gains on Tuesday in Asian markets follows a mostly weaker US session on Monday.
The S&P 500 SP500 declined 0.4 per cent, while larger losses were incurred on the Nasdaq Composite, which dropped 1.2 percent to 11,664.
The Dow Jones index was barely positive, up just 0.08 percent.
"Risk markets were weighed down by concerns over deteriorating global growth prospects," ANZ strategists said in a research note.
"Hugely disappointing Chinese data for April and the plunge in the US Empire State manufacturing index raised anxiety that economic activity may be suffering an abrupt loss in momentum as supply-chain disruption intensifies. The profile of the data suggests that supply issues related to the zero-COVID policy in China are the key factors."
The New York Fed's Empire State manufacturing index published on Monday showed an abrupt fall during May and shipments fell at their fastest pace since the beginning of the pandemic.
In early Asian trade, the yield on benchmark 10-year Treasury notes rose to 2.8931 percent compared with its US close of 2.879 percent on Monday.
The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 2.578 percent compared with a US close of 2.568 percent.
"Markets currently price the Fed funds rate to be 53 basis points higher at the next meeting in June, and 200 basis points higher by year end," said Imre Speizer, Westpac's head of New Zealand strategy.
The dollar rose 0.06 percent against the yen to 129.24. It is getting closer to its high this year of 131.34.
The European single currency was up 0.1 percent on the day at $1.0437, having lost 0.99 percent in a month.
US crude dipped 0.18 percent to $113.99 a barrel. Brent crude was slightly higher at $114.40 per barrel.
Gold was slightly higher. Spot gold was traded at $1,826.7072 per ounce.
