SYDNEY: Asian shares hit five-week highs on Wednesday as investors hoped the Federal Reserve would follow the lead of the European Central Bank and open the door to future rate cuts at its policy meeting later in the day.
Indeed, ECB President Mario Draghi’s shock about-face on easing fuelled talk of a worldwide wave of central bank stimulus, firing up stocks, bonds and commodities.
Adding to the cheer was news U.S. President Donald Trump would meet with Chinese President Xi Jinping at the G20 summit later this month, and that trade talks would restart after a recent lull. But most analysts do not expect a decisive breakthrough.
“We expect no real change following the G20 sideline meeting. (But) the fact that both sides are talking should at least postpone thoughts of a further increase in tariffs, for a while at least…,” ING’s Greater China economist Iris Pang said in a note.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.5% to a five-week top. Shanghai blue chips firmed 1.7% to a six-week peak.
Japan’s Nikkei rose 1.6%, while Australia added 1% to its highest in 11 years. E-Mini futures for the S&P 500 were a fraction firmer after a upbeat Wall Street session.
The Dow ended Tuesday with gains of 1.35%, while the S&P 500 rose 0.97% and the Nasdaq 1.39%. The S&P 500 has surged 6% so far this month to be 1% from the all-time high hit in early May.
All eyes are now upon the Fed which is scheduled to release a statement at 1800 GMT on Wednesday, followed by a press conference by Chairman Jerome Powell shortly after.
Yet the heightened anticipation also creates risks the Fed might fail to meet investors’ high expectations.
“Market expectations for a dovish shift are nearly universal, the only question seems to be the degree,” said Blake Gwinn, head of front-end rates at NatWest Markets.
Futures are almost fully priced for a quarter-point easing in July and imply more than 60 basis points of cuts by Christmas. “Markets will be looking for validation of this pricing,” he added. “We think this represents a fairly high bar for the Fed to deliver a dovish surprise.”
BofA Merrill Lynch’s latest fund manager survey spoke volumes about the sea change in sentiment.
Allocation to global equities dropped 32 points to a net 21% underweight, the lowest since March 2009, while the bond allocation hit the highest since September 2011.
Interest rate expectations collapsed, while concerns about a trade war soared to be the top risk for investors, ahead of monetary policy impotence, U.S. politics and a slower China.
The shift was clear in bond markets where German yields hit record lows deep in negative territory, while Japanese yields sank to the lowest since august 2016 at -0.145%.
Yields on the U.S. 10-year note reached the lowest since September 2017 at 2.016%, a world away from the 3.25% top touched in November last year.
The fallout in currencies was significantly less, in large part because it was hard for one to gain when all the major central banks were under pressure to ease.
The euro did pull back a bit after Draghi’s comments, but at $1.1192 was still well within the recent trading range of $1.1106-$1.1347.
The dollar remained sidelined against the yen at 108.49 , and a shade firmer on a basket of currencies at 97.657 . The yuan picked up to 6.905 to the dollar on the trade news.
In commodity markets, the rate-cut buzz kept gold near 14-month highs at $1,344.20 per ounce. Michael Hsueh, an analyst at Deutsche, noted the decisively dovish shift in central bank expectations was bullish for gold.
“This provides the desired backdrop – one in which investors are less likely to be concerned about the opportunity cost of holding a non-yielding asset, particularly versus the increasing stock of negative-yielding debt,” he said.
Reflation trades helped steady oil prices, as did hopes for a thaw in Sino-U.S. tensions.
Brent crude futures were off 6 cents at $62.06, while U.S. crude firmed 3 cents to $53.93 a barrel.
Confidence among Asian companies in the second quarter fell to its lowest since the 2008-09 financial crisis, as the trade war disrupts global supply chains and shows little sign of easing soon, a Thomson Reuters/INSEAD survey found.
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KUALA LUMPUR, April 11 — The FTSE Bursa Malaysia KLCI (FBM KLCI) were lower at early trade today, brought down by weak heavyweights — Tenaga, PetChem, Nestle and Dialog, despite the lower liners continued strength. At 9.15am, the benchmark FTSE…
KLCI opens lower as key heavyweights weigh
KUALA LUMPUR: The FTSE Bursa Malaysia KLCI (FBM KLCI) were lower at early trade today, brought down by weak heavyweights Tenaga, PetChem, Nestle and Dialog, despite the lower liners continued strength.
At 9.15 am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) index declined 3.12 points to 1,63.34.
The index opened 0.13 points lower at 1,639.33.
On the broader market, gainers outnumbered decliners 186 to 114, while 234 counters remained unchanged, 1,335 untraded and 31 others suspended.
Turnover stood at 476 million shares worth RM143.9 million.
Malacca Securities Sdn Bhd said under the prevailing environment, the FBM KLCI is set for an extended indifferent trend, lingering within the 1,630 and 1,650 levels.
“There are also few market events to look forward to as several large initial public offerings are said to have been held back due to the uncertain market environment.
“Corporate exercises are also fewer due to the weak market sentiments, while valuations are already fair,“ it said today.
As for the lower liners, Malacca Securities said current low valuations will continue to draw in substantive trading actions, possibly allowing the broader market to recover further.
“However, we think that the recent gains are already overdone and consolidation is due to set in soon,“ it added.
At the same time, regional leads were also bearish with Asian benchmark indices closed mostly lower on fresh concerns over the global economic growth after the International Monetary Fund slashed global growth outlook to 3.3 per cent from 3.5 per cent.
Meanwhile, U.S stock markets rebounded after the U.S Federal Reserve stood pat on its dovish stance regarding future rate hike in the latest monetary policy meeting.
Of the heavyweights, Maxis went down 10 sen to RM5.60 while Digi dropped five sen to RM4.65 sen.
Meanwhile, Tenaga down 18 sen to RM12.40, PetChem was eight sen lower at RM8.92, Nestle dropped RM1.50 to RM145.30 and Dialog went down two sen to RM3.22.
Meanwhile, gainer heavyweights — Public Bank was four sen higher at RM22.68, Malaysia Airports added eight sen to RM6.83 and Maybank rose one sen to RM9.29.
Of the actives, Daya Materials, Dynaciate and Bio Osmo were half-a-sen higher each at 1.5 sen, 9.5 sen and 7.5 sen, respectively, while Ekovest inched up three sen to 66.5 sen.
The FBM Emas Index declined 8.85 points to 11,626.19, the FBMT 100 Index dropped 13.46 points to 11,443.68 and the FBM Ace Index inched down 13.27 points to 4,788.75.
The FBM Emas Shariah Index shed 20.61 points to 11,840.60, but the FBM 70 appreciated 16.43 points to 14,610.64.
Sector-wise, the Financial Services Index up 11.93 points to 16,872.02, while the Industrial Products and Services Index decreased 0.54 of-a-point to 169.42 and the Plantation Index was 2.27 points lower at 7,294.73.
Gold futures contracts on Bursa Malaysia Derivatives were untraded in the early session on lack of catalyst, dealers said.
At 9.35 am, April 2019, May 2019, June 2019 and July 2019 stood at RM171.30, RM171.50, RM171.40 and RM171.50 a gramme respectively.
Volume was nil, while open interest amounted to 32 contracts.
At 9.30 am, the price of physical gold increased by 82 sen to RM167.26 per gramme. — Bernama
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SYDNEY: Asian shares gained on Monday on reports the United States and China were close to striking a trade deal after a year-long tariff skirmish while the dollar eased as traders wagered Federal Reserve policy would remain accommodative.
The Wall Street Journal reported Washington could lift most or all of its tariffs on Beijing while a summit between U.S. President Donald Trump and his Chinese counterpart Xi Jinping to sign a final trade deal could happen later this month.
That followed comments from Trump on Friday that he had asked China to immediately remove all tariffs on U.S. agricultural products because trade talks were progressing well. He also delayed previously scheduled plans to impose 25 percent tariffs on Chinese goods.
All of that proved positive for risk sentiment with E-mini futures for the S&P500 and the Dow adding 0.4 percent each.
MSCI’s broadest index of Asia-Pacific shares outside Japan took the lead and climbed 0.1 percent for their second straight day of gains. Australian shares were up 0.7 percent while Japan’s Nikkei strengthened 0.8 percent. Chinese shares rallied too, with the blue-chip index up 1 percent.
The Asia ex-Japan index has risen almost 10 percent so far this year.
“Following a robust recovery for risk assets since the start of the year, a number of events in March are going to set the tone for global investors on whether this rebound is sustainable,” said Tai Hui, Asia Pacific Chief Market Strategist at JPMorgan Asset Management.
Tai listed the prospective Trump-Xi trade summit among such events while China’s National People’s Congress could provide clues on new policies aimed at boosting Asia’s largest economy.
“These policies will be influential to maintain the upbeat onshore sentiment that has driven a strong rebound in the A-share market,” Tai said.
China’s CSI300 index landed its best week since November 2015 after index provider MSCI quadrupled its weighting for mainland shares in its global benchmarks.
March is expected to be a crucial month for global markets with UK parliament voting on Britain’s exit from the European Union while the Fed holds its policy meeting, which could yield clues on plans for future rate hikes and balance sheet reduction.
“While it will take time for economic data to stabilise from the current slowdown, policy shifts by central banks and governments, especially in the U.S. and China, should help support investor confidence for now,” Tai noted.
A slew of surveys has highlighted how much manufacturers are suffering worldwide, particularly those exposed to China’s slowdown, and added to expectations that central bank policy tightening is as good as finished.
In the United States, ISM data showed manufacturing activity for February dropped to its lowest since November 2016, while the University of Michigan survey showed consumer sentiment fell short of expectations in the month.
In addition, a U.S. Commerce Department report showed tame inflation pressures and U.S. personal income falling for the first time in more than three years in January.
The modest inflation lends support to the Fed’s patient posture on hiking U.S. interest rates, analysts said.
The dollar index slipped against a basket of major currencies from Friday’s one-week high of 96.551. It was last down 0.1 percent at 96.410.
Against the Japanese yen, the dollar was a tad higher at 111.96
The euro held in familiar ranges and was last at $1.1369.
The Australian dollar, a liquid proxy for risk hedges, gained on the broader improvement in sentiment but disappointing domestic data took the wind out of its sail. The currency was last at $0.7083 after earlier rising as high as $0.7118.
Elsewhere, oil prices firmed on Monday with Brent futures up 17 cents at $65.24 a barrel. U.S. crude added 23 cents to $56.03.
Spot gold was a tad higher at $1,295.83 an ounce.
SYDNEY, March 4 — Asian shares gained today on reports the United States and China were close to striking a trade deal after a year-long tariff skirmish while the US dollar eased as traders wagered Federal Reserve policy would remain…