Asian Equities Advance, Shrugging Off Tensions: Markets Wrap

Asian stocks rose for a second day despite escalating geopolitical risks, with Japan leading gains as the world’s third-largest economy reopens.

Treasuries were flat in early trading after the three-day U.S. weekend, while the dollar was little changed. Shares in Tokyo rose the better part of 1% at the open, while Sydney and Seoul saw more modest gains. Crude oil advanced toward $34 a barrel in New York.

Tensions between Washington and Beijing remain in focus with China condemning the U.S. for adding 33 Chinese entities to a trade blacklist, but without announcing any retaliatory steps. Meanwhile, China sought to reassure Hong Kong that its judiciary would remain independent under a new national security law.

Cutting against the tensions are mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency Monday, while a rise in a gauge of German business expectations provided another glimmer of hope for equity bulls.

On the stimulus front, European Central Bank key policy maker Francois Villeroy de Galhau told a Paris conference that there is room to innovate and act “rapidly and powerfully,” signaling it could boost its emergency bond-buying program. Singapore’s Deputy prime minister Heng Swee Keat is expected to announce details of a fourth stimulus package.

Recovery dynamics and potential drug developments are among “the key reasons to be positive,” said Chris Iggo, chief investment officer of core investments at AXA Investment Managers. “That does not mean we should ignore the risk of second waves, prolonged weak growth and geopolitical issues.”

Here are some key events coming up:

  • Earnings continue with companies including Nissan Motor, British Land, Royal Bank of Canada and HP Inc.
  • Singapore’s parliament on Tuesday is expected to announce another stimulus package.
  • Thursday brings the U.S. jobless claims reading for the week ended May 23.
  • Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.

These are the main moves in markets:

Stocks

  • Japan’s Topix Index rose 0.8% as of 9:11 a.m. in Tokyo.
  • Futures on the S&P 500 were up 1% from Friday.
  • Australia’s S&P/ASX 200 Index gained 0.5%.
  • Kospi Index rose 0.4%.
  • Hong Kong’s Hang Seng Index futures rose 0.8% earlier.

Currencies

  • The Bloomberg Dollar Spot Index was little changed.
  • The yen was little changed at 107.72 per dollar.
  • The offshore yuan was flat at 7.1485 per dollar.
  • The euro was little changed at $1.09.

Bonds

  • U.S. 10-year Treasury yields were little changed at 0.66%.
  • Australia’s 10-year bond yields were little changed at 0.85%.

Commodities

  • West Texas Intermediate crude added 2% to $33.91 a barrel.
  • Gold dipped 0.2% to $1,729 an ounce.

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