SYDNEY (Reuters) – Asian markets were fueled on Monday by signs of resuming China’s economic recovery with pent-up demand, fiscal stimulus and surprisingly resilient exports that boosted sentiment in the region.
The brighter mood spread to Europe, with Eurostoxx 50 futures and German DAX futures up 1.7% each at the opening, while FTSE London futures climbed 1.3%.
The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.7% to 551.48, but remained within reach of a two-month low of 543.66 reached last week.
The index is expected to end the month in the red after three straight monthly gains as the coronavirus pandemic continues to wreak economic havoc around the world and sparks investor concern over extremely high valuations.
Traders also remain cautious ahead of a US presidential debate on Tuesday and fear that a spike in new coronavirus cases in Europe could hurt the global economic recovery.
On that day, Chinese stocks opened higher and helped support Asian markets after a tentative start. The blue chip CSI 300 index was the latest up 0.3%, offsetting some of the early gains.
Sentiment in Asia was supported by data over the weekend which showed Chinese industrial company profits rose for the fourth consecutive month in August, supported in part by a rebound in commodity and manufacturing prices. ‘equipment.
Economic indicators in August, ranging from exports to producer prices and factory output, all pointed to a further recovery in the industrial sector thanks to a series of measures aimed at reviving the world’s second-largest economy. This in turn has supported the global recovery, although the surge in global COVID-19 cases has raised new risks.
Elsewhere, the Japanese Nikkei rose 1.3%, partly on a lower yen, while South Korea’s KOSPI index rose 1.35%.
The main Australian stock index reversed the first losses to end flat.
The large gains in Asia follow a Wall Street rally on Friday, although analysts expect the gains to be short-lived as expectations for economic growth begin to weaken.
Of particular concern is the resurgence of COVID-19 cases in Europe, stifling earlier hopes that authorities could have begun to exercise some control over the outbreak and increasing pressure on businesses already struggling with losses.
“Clouds have started to gather in the developed world as political uncertainty grows in the United States and Europe grappling with a resurgence of COVID-19 cases”, Kerry Craig, Global Market Strategist, JP Morgan Asset Management.
COVID-19 cases are approaching 33 million globally, with 992,470 dead, as Europe has seen an increase in new infections.
“While governments are reluctant to reintroduce nationwide lockdowns, local and sectoral restrictions can last for some time, restricting economic activity,” added Craig.
Investors will then focus on the first debate between US President Donald Trump and his rival Joe Biden on Tuesday before the November election.
A strong performance in Tuesday’s debate by Biden, who currently has a modest lead in betting and polls, could boost global trade and renewables-related stocks, while a perceived victory by Trump could benefit businesses from fossil fuels and defense.
There will also be a focus on the progress of a new US tax support program, while investors will closely follow the UK-Europe post-Brexit trade negotiations as they unfold. ‘they continue this week.
In currencies, the dollar rose from an almost two-week high against the Japanese yen at 105.32.
The euro was last at $ 1.1629, not far from a two-month low of $ 0.1611 hit on Friday.
The British pound rose 0.3% to $ 1.2774.
The risk-sensitive Australian dollar was slightly firmer at $ 0.7052 after falling for six straight sessions as the odds narrowed on the prospect of further easing of monetary policy in the country.
In commodities, oil prices have come under pressure as further restrictions on mobility in various countries to contain a resurgence of coronavirus cases cloud the outlook for fuel demand to recover.
US Brent crude slipped 37 cents to $ 41.55 a barrel while US light crude fell 39 cents to $ 39.86.
Gold was one shade lower at $ 1,858.2, moving away from an all-time high of over $ 2,000 per ounce hit in August.