Market Close Apr 08

Improving economic outlook sustains market gains

Oil slips amid subsequent wave of virus outbreaks; China markets eye cross-Strait tensions; Japan spooked by regulator scrutiny report

Improving economic outlook sustains market gains
Four US-made F-16 fighter jets cross the sky during a drill near the Suao navy harbour in Yilan, eastern Taiwan, in this file photo from April 2018. China has ramped up pressure on Taipei after its foreign minister vowed to 'fight to the end' if the PLA attacks the island. Photo by Sam Yeh / AFP.

(ATF) Hong Kong: Asian markets were broadly firm as the US Federal Reserve minutes showed its view of the economy continued to improve and that it would continue asset purchases until it meets its employment and price stability goals.

But Chinese markets remained under pressure as tensions between Beijing and Taipei continued – China sent more fighter jets into Taiwan’s air defence zone in a stepped-up show of force with Taiwan’s foreign minister saying it would fight to the end if China attacks.

Japan’s Nikkei 225 index ended flat after a report that regulators will heighten scrutiny on high-risk trades by domestic financial institutions in the wake of the Archegos fallout.

Australia’s S&P ASX 200 added 1.02%, Hong Kong’s Hang Seng index advanced 1.16%, while China’s CSI300 edging up 0.17% and the MSCI Asia Pacific index rising by just 0.11%.

But after the strong rally emerging markets have seen, investors are taking a breather.

“The global economy is enjoying a strong bounce,” Luca Paolini, chief strategist of Pictet Asset Management, said.

“However, we recognise that, as the economic recovery is picking up pace in developed economies, an accompanying rise in both long-term interest rates and the US dollar are a threat to countries that have come to depend on cheap dollar funding,” he added, while downgrading emerging equities to neutral. Pictet also remains neutral bonds and underweight cash.

US Treasuries edged up with the 10-year yield dipping one basis point to 1.66% and the US dollar weakened marginally against a basket of currencies.

Oil eased as West Texas Intermediate crude declined 0.6% to $59.42 a barrel.

“The third and fourth wave virus outbreaks in Europe and parts of Asia, notably India, have elevated lockdown concerns that continue to weigh in the market’s topside ambitions hitting the prompt demand outlooks,” Stephen Innes, Chief Global Market Strategist at Axi, said.

“And at this stage of the oil market recovery, Covid-19 resurgence continues walking back investors' thoughts of an oil supercycle down to a very ordinary rebound as the last few miles remain littered with supply and demand speed bumps.”

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Asia Stocks

· Japan’s Nikkei 225 index ended flat

· Australia’s S&P ASX 200 added 1.02% 

· Hong Kong’s Hang Seng index advanced 1.16%

· China’s CSI300 edged up 0.17%

· The MSCI Asia Pacific index inched up 0.11%.

Stock of the day

BYD Company Ltd shares rose as much as 1.7%, outperforming the market after it said they had sold 70% more cars in the first quarter compared to a year ago. 

Asia markets Cross-Strait tensions japan China Taiwan Hong Kong Oil eases