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Business, Asia

Monday, Sep 1, 2014

Business, Asia

Asian shares cautiously push higher

Reuters | Monday, Sep 1, 2014

Pedestrians standing in front of an electronic board showing the various stock prices outside a brokerage are reflected in a polished stone surface, in Tokyo.

Asian shares edged higher on Monday, with investors wary of a deepening crisis in Ukraine and a downbeat China manufacturing survey, while the euro touched a fresh one-year low ahead of this week's European Central Bank meeting.

Ukrainian President Petro Poroshenko warned a "full-scale war" was imminent if Russian troops continued to advance in support of pro-Moscow rebels, while US and European leaders threatened Moscow with further sanctions.

But Friday's Wall Street cheer managed to offset the geopolitical concerns and the China survey. US shares climbed ahead of a three-day weekend for Monday's US Labor Day holiday.

"Naturally, developments between Russia and the Ukraine will be in the cross sights. However, despite more concerning rhetoric that tensions are nearing a point of no return, we haven't really seen a heavy bias towards defensive trading strategies today," IG chief market strategist Chris Weston wrote in a note to clients.

Financial spreadbetters predicted flat openings in European markets, with Britain's FTSE 100 .FTSE expected to open between 4 points higher and 7 points lower, and both Germany's DAX .GDAXI and France's CAC 40 .FCHI seen opening unchanged to 1 point higher.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shrugged off early losses and was up about 0.3 per cent, moving back toward last Thursday's six-and-a-half-year peak.

Japan's Nikkei stock average .N225 ended up about 0.3 per cent, taking back some of the ground lost in August, when it shed 1.3 per cent.

The gains came even after an official index of China's manufacturing sector fell from a 27-month high to 51.1 in August, a government study showed on Monday, slightly less than forecast and adding to signs of growing softness in the Chinese economy. Still, it was the second-highest reading this year.

The final HSBC/Markit Purchasing Managers' Index also dropped, slipping to 50.2 in August, roughly in line with a preliminary reading of 50.3 and only a shade above the 50-point mark that demarcates an expansion in activity from contraction.

"The economy still faces considerable downside risks to growth in the second-half of the year, which warrants further policy easing," said Qu Hongbin, an economist at HSBC.

But Friday's gains on Wall Street underpinned markets. The S&P 500 index .SPX set a new closing high, ending the day above the 2,000 milestone for the third time. For the month, the Dow Jones industrial average .DJI rose 3.2 per cent, the S&P 500 added 3.8 per cent, and the Nasdaq Composite .IXIC gained 4.8 per cent.

The dollar index edged up to 82.764 .DXY in Asian trade, not far from Friday's 13-month high of 82.773.

"Driven by the real and anticipated divergence in economic performance and trajectory of monetary policy, the long-anticipated US dollar recovery has begun," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note to clients.

"As is evident in the positioning of the futures market, and confirmed by anecdotal evidence, speculative participants have amassed a significant large US dollar position," Chandler said.

Speculators raised their bullish bets on the US dollar for a second week to their highest in more than two years, according to data from the Commodity Futures Trading Commission released on Friday. The dollar's net long position soared to $32.92 billion (S$ 41 billion) in the week ended Aug. 26. [IMM/FX]

The dollar rose slightly to 104.17 yen JPY=, moving back toward last week's seven-month high of 104.49.

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