TOKYO (Reuters) – Asian stocks rebounded from a three-month low on Friday thanks to a late-day rally on Wall Street, with optimism about the global economic recovery overshadowed by rising tensions between the West and China.
The MSCI ex-Japan Asia index rose 0.37% after hitting a nearly three-month low on Thursday, while the Shanghai Composite Index gained 0.78%, breaking a three-day losing streak.
“The recent declines in Chinese stocks have been worrying, but there is no change in the fact that the Chinese economy is recovering,” said Yasutada Suzuki, head of emerging markets investments at Sumitomo Mitsui Bank.
Chinese stocks fell near a three-month low reached earlier in the month on Thursday. The European Union joined with Washington allies this week in imposing sanctions on officials in China’s Xinjiang region over allegations of human rights violations, which resulted in retaliatory sanctions from Beijing.
“All the sanctions so far have been largely symbolic and are expected to have little economic impact. But the Sino-US confrontation affects market sentiment. It might take some time before they come to a compromise, ”Suzuki added.
Japan’s Nikkei rose 0.89% after Wall Street stocks rallied, driven by cheap cyclical stocks that were battered by the pandemic.
The Dow Jones Industrial Average rose 0.62% and the S&P 500 rose 0.52% while the Nasdaq Composite only added 0.12%.
Analysts said trade was driven more by a late-quarter rebalancing of investment portfolios by institutional investors than by the news flow, although they noted that overnight stocks were mostly favorable to investors. actions.
Data from the US Department of Labor showed jobless claims fell to a year-long low last week, a sign that the US economy is on the verge of stronger growth as the public health situation is improving.
In his first official press conference, US President Joe Biden said he would double his administration’s vaccination rollout plan after hitting the previous target of 100 million shots 42 days ahead of schedule.
But while the improvement in the health crisis in the United States has supported risk appetite globally, investors are increasingly alarmed by a divergence in health conditions.
“Vaccination in continental Europe is behind schedule. Compared to the United States, economic reopenings are likely to be delayed as some countries are forced to impose lockdowns, ”said Soichiro Matsumoto, chief investment officer, Japan, of Credit Suisse’s private banking unit in Tokyo.
This put pressure on the euro, which licked its wounds to $ 1.1780 after dropping to $ 1.1762 overnight, its lowest level since November.
The dollar also rose to 109.17 yen, a striking distance from last week’s nine-month high of 109.365 yen.
The US currency index is near its highest level since mid-November, having gained 2.0% so far this month.
“The dollar is absolutely essential,” said James Athey, chief investment officer at Aberdeen Standard Investments in London.
“If the dollar starts to rise, it becomes a problem. This means weakness in commodities and weakness in emerging markets and it is starting to provide compensating disinflationary rhetoric. “
Oil prices rebounded somewhat after falling 4% on Thursday, although they are on track for their third consecutive week of losses, fearing a further reduction in demand. [O/R]
Besides Europe, major developing economies such as Brazil and India are also grappling with a resurgence of COVID-19 cases.
The market has always been supported by concerns about the supply disruption as a stranded container ship in the Suez Canal could block the vital shipping lane for weeks.
US crude was the latest up 0.99% to $ 59.14 a barrel and Brent was at $ 62.44, up 0.79%.