Monday, November 25, 2024

Asian markets inch up after China stimulus, oil gains

Tuesday, March 1, 2016, 0:35
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TOKYO: Asian shares rose slightly in early trade on Tuesday, with sentiment bolstered by China’s easing move and gains in oil prices but also constrained by lacklustre US and European data that kept concerns about global growth momentum alive. MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 0.2 per cent. Japan’s Nikkei was down 0.5 per cent in early trading, crimped by gains in the yen. The People’s Bank of China (PBOC) said on its website on Monday that it cut its reserve requirement ratio, or the amount of cash that banks must hold as reserves, by 50 basis points. “The general effects of the RRR reduction are questionable but China’s government would not have taken this move if they were not concerned about the economy,” Kathy Lien, managing director of BK Asset Management in New York, said in a note to clients. “Chinese data is notoriously difficult to handicap but this gives us reasons to believe that manufacturing and service sector activity slowed in the month of February,” she said. China’s move, combined with a drop in crude output from OPEC and the United States, and a pledge by Saudi Arabia to limit market volatility, lifted crude oil futures and helped them post their first gaining month in four. Brent futures were up 3.4 per cent at $36.64 a barrel, while US crude futures added about 0.1 per cent to $33.78 after surging 3 per cent overnight. Wall Street shrugged off the higher oil prices and finished lower, with MSCI’s global stocks index logging its fourth straight losing month. Downbeat US data revived concerns about the strength of the economy. Contracts to buy previously owned US homes fell to their lowest level in a year in January, while the Chicago Purchasing Manager Index – a leading indicator of the US economy – contracted to 47.6 in February. The latest figures followed last week’s spate of strong data, including improving consumer spending, that had suggested the US economic recovery was on track and the Federal Reserve could still raise interest rates again this year. European figures released on Monday showed euro zone annual inflation fell back into negative territory last month, adding to the pressure the ECB faces to ease monetary policy further this month. All 18 euro money market traders polled by Reuters expect the ECB to cut its deposit rate again at its March 10 meeting, and they said there was an even chance it would also increase its monthly asset purchases. Those expectations weighed on the euro, which edged up about 0.1 per cent to $1.0885 but remained not far from a one-month low of $1.0859 struck on Monday. Against the perceived safe-haven yen, the common currency was down 0.1 per cent at 122.37, not far from a low of 122.085, which was its lowest level since April 2013. The dollar was buying 112.47 yen, down about 0.2 per cent. The Australian dollar was steady against its US counterpart at $0.7138 ahead of a policy decision from the Reserve Bank of Australia due at 0330 GMT. Australia’s central bank is likely to stand pat on policy, leaving its cash rate unchanged at a record low 2.0 per cent.

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