Chinese shares give Asia a boost
Chinese shares give Asia a boost
TOKYO - Asian stocks shrugged off a drop in Wall Street and hovered near three-year highs on Monday, with China taking the lead after data showed a robust jump in profits earned by industrial firms in the world's second-largest economy.
The dollar traded near six-months peaks against a basket of major currencies as the euro continued to sag.
Profits earned by Chinese industrial firms rose 17.9% in June to 588.08 billion yuan ($94.98bn) from a year earlier, up sharply from an 8.9% rise in May, the National Bureau of Statistics said.
Recent data have reinforced market expectations that the Chinese economy is powering through its recent soft patch as the government uses targeted stimulus measures to support growth.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2%, close to a three-year high of 509.23 scaled on Friday.
China's CSI300 jumped 2.3% and the Hang Seng climbed 0.8%. Tokyo's Nikkei average, which hit a six-month closing high Friday, was up 0.5%.
Funds from Middle Eastern and Asian investors were trickling in again as the Muslim fasting month ended, helping to shore up regional stocks, Daiwa SB Investments chief strategist Soichiro Monji said in Tokyo.
'Geopolitical concerns remain as the conflict in the Ukraine does not look like it will end soon, but there is some relief spreading that the impact will be contained,' he said.
The focus turned to whether this week's run of US data would be strong enough to keep fuelling risk appetite.
Upcoming US indicators include the Case-Shiller price index on Tuesday, second-quarter gross domestic product (GDP) due on Wednesday and nonfarm payrolls on Friday.
Factory activity surveys for major Asian economies will also be released on Friday.
The euro traded little changed at $1.3432, within close reach of $1.3421 plumbed on Friday, its lowest since November 2013.
The euro took another hit on Friday when Germany's Ifo business climate index painted a gloomy picture of the economy.
It had already been under pressure from a range of factors, including the expectation of further easing by the European Central Bank (ECB) and diverging interest rates seen favouring the US over Europe.
'We should brace for the euro breaking below key support at 1.34, given diverging US and European monetary policies.
Dollar buying pressure is building as shown by the strength of the dollar index, which this week's data, if upbeat, could enhance further,' IG Securities market strategist Junichi Ishikawa said in Tokyo.
The two-day Federal Reserve policy review ending on Wednesday was also in focus but expectations were for chairwoman Janet Yellen to deliver the usual dovish message.
The dollar index, a gauge of its strength against a basket of key currencies, stood little changed at ¥81.026 after striking a near six-month high of ¥81.804 on Friday.
The dollar fetched ¥101.81, having lost a bit of momentum in the wake of a rise in US Treasury yields after climbing to a two-week high of ¥101.94 on Friday.
While the attention of equity and currency markets has shifted towards major corporate earnings and macroeconomic trends, geopolitical issues remained a key factor in commodities such as oil.
Brent crude shed 0.4% to $107.96 a barrel but still retained a chunk of its gains from Friday, when it climbed more than $1 as fighting in Ukraine and deteriorating relations between Russia and the US ignited new fears of supply disruptions.
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