Inside Financial Markets

Asian Stocks Gain After Global Rally; Yen Weakens

Asian equities rose, extending a rally that swept across global financial markets in the wake of French elections. Chinese shares were steady after a selloff, while the yen weakened with gold.

Japanese equities rose for a fourth straight session, after the MSCI All-Country World Index closed at a record and European shares surged to a 20-month high. Markets jumped as Emmanuel Macron advanced as the favorite in the presidential runoff, easing concerns that France will leave the euro currency bloc. The euro was little changed following its biggest advance since June, while Treasuries maintained losses. Australia and New Zealand are closed Tuesday for Anzac Day.

With anxiety over the French elections fading, investors may also be showing relief in the absence of provocations from North Korea and signs of stability in Chinese markets. Traders are turning their attention to a raft of other potential market-moving events this week, including corporate earnings and U.S. President Donald Trump’s agenda for the world’s largest economy.

“The uplift in risk appetite had been the result of a single event, but this week carries with itself a multitude of factors to look out for,” said Jingyi Pan, a market strategist in Singapore at IG Asia Pte Ltd. “The second half of the week certainly brings President Donald Trump back to the stage as he presents both opportunities, in the form of his tax package, and risk, should his push for the border wall drive the U.S. government to a shutdown.”

Trump will call for cutting taxes for individuals and lowering the corporate rate to 15 percent when he unveils his plan Wednesday, according to a White House official. At the same time, the administration appeared ready to go to the mat for its planned Mexican border wall in this week’s must-pass spending bill, setting up a clash with Democrats that may make a government shutdown at week’s end more likely.

Traders are keeping an eye on North Korea, as Kim Jong Un marks the 85th anniversary of the Korean People’s Army on Tuesday. Chinese President Xi Jinping called for restraint on North Korea in a phone call with Donald Trump, who also spoke with Japanese Prime Minister Shinzo Abe as the U.S. and Japan began joint naval drills in the region.

Chinese markets are in focus after the Shanghai Composite on Monday fell below its 200-day moving average for the first time since late September. Declines for Chinese equities extended into a third week as the country’s authorities ramped up their campaign to reduce financial-system risk by tightening the screws on leverage.

Read our Markets Live blog here:

Other events that may move markets this week:

  • Alphabet Inc., Microsoft Corp., Amazon.com Inc., Twitter Inc., Intel Corp., Credit Suisse Group AG, Barclays Plc, Bayer AG, Daimler AG and Total SA are among major companies releasing results this week.
  • The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday. Though inflation remains well below the central bank’s 2 percent target, it’s ticking up.
  • The European Central Bank sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the ECB is starting to discuss an exit from its extraordinary stimulus.
  • U.S. GDP is due at the end of the week. It’s projected to show the economy expanded at a 1.0 percent annualized rate in the first quarter, the weakest pace in a year.

Here are the main market moves:

Stocks

  • The MSCI Asia Pacific Index was up 0.5 percent as of 11:53 a.m. in Tokyo, rising for a fourth day. Japan’s Topix rose 0.9 percent after jumping 1 percent Monday. South Korea’s Kospi increased 0.5 percent. Taiwan’s Taiex jumped 0.7 percent and Singapore’s Straits Times Index added 0.5 percent.
  • The Shanghai Composite advanced 0.2 percent after tumbling 1.4 percent Monday, the most since Dec. 12. The Hang Seng Index rose 0.9 percent and the Hang Seng China Enterprises Index jumped 1.1 percent, the most in a month.
  • Contracts on the S&P 500 added 0.1 percent. The index climbed 1.1 percent Monday to within 1 percent of its all-time closing high.
  • The Stoxx Europe 600 Index jumped 2.1 percent to the highest since August 2015. France’s CAC 40 soared 4.1 percent while Germany’s DAX climbed 3.4 percent.

Currencies

  • The euro retreated 0.1 percent to $1.0858, after soaring as much as 2 percent Monday.
  • The yen fell 0.3 percent to 110.12 per dollar. The currency dropped 0.6 percent in the previous session.
  • The Bloomberg Dollar Spot Index increased 0.2 percent, after slipping 0.5 percent Monday.
  • The Canadian dollar dropped 0.4 percent to the lowest level of the year as Trump was reported to say he would impose a 20 percent tariff on Canadian softwood lumber. The Mexican peso also slid 0.4 percent.

Bonds

  • Yields on 10-year Treasuries were little changed at 2.27 percent, after rising three basis points Monday.
  • The yield on French 10-year notes dropped 11 basis points to 0.83 percent Monday. Portuguese, Spanish and Italian bonds also rallied.

Commodities

  • Gold lost 0.2 percent to $1,274.34 after slipping 0.6 percent on Monday.
  • Oil advanced 0.5 percent to $49.47 following six straight days of losses.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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