Sep 15, 2020
According to China’s Data, the Asian Stocks Are Headed Higher, While The Market Focuses on Fed Meeting
Asian equities extended gains with investor sentiment supported by Chinese data and optimism about COVID-19 vaccines on Tuesday, while the dollar slipped.
China's industrial output rose 5.6% in August from a year ago, while the Chinese blue chips added 0.4%, expanding for a fifth straight month this year.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.3%, for a fourth straight day of gains.
The South Korean shares climbed 0.3%, Australia's S&P/ASX 200 index added 0.1%, and Japan’s Nikkei shed 0.8%,
Yoshihide Suga, the Japanese Chief Cabinet Secretary, is paving the way for Japan's first change of leader in nearly eight years. He also won a landslide victory in a ruling party leadership election. Due to this, strategists expect Japanese equities to take support from Suga's win.
The joint head of Asia Pacific equity research at Nomura, Jim McCafferty stated:. "He's seen as someone who's particularly stock market-friendly. The fact that we've got political certainty for the next two years from someone who's connected to the free market is going to be good news for Japan."
The EURO STOXX 50 futures eased 0.2%, while the E-Mini futures for the S&P 500 slipped 0.3%.
The gains in Asia have been led by technology stocks this year. The U.S. retail sales figures from August are due Wednesday.
McCafferty, who prefers North Asian companies due to their stronger balance sheets, also added: "From an asset class point of view, if you require to generate any income from your investment portfolio, then equities is one of the few places you can do that because bond yields are so low."
The US Federal Reserve is starting a two-day policy meeting on Tuesday, while the Investors will also look to central banks for direction. This is the first meeting, since it unveiled a landmark shift to a more tolerant stance on inflation in August amidst the pandemic.
On Thursday, the Bank of Japan and the Bank of England will announce their respective policy decisions.
The Fed policymaker’s projections will be focused on the Market on the U.S. growth outlook and on any details about what the bank intends to do to encourage inflation this year.
The Dow Jones Industrial Average closed up 1.2%, and the S&P 500 rose 1.3%, while the tech-heavy NASDAQ Composite added 1.9%.
The global asset allocation report by the analysts at T. Rowe Price said: "We remain neutral stocks versus bonds as we balance extended equity valuations, fading fiscal support, and upcoming U.S. election risks against still ultra-low interest rates and a gradually improving economic environment."
They favor cyclical exposure through small-cap and emerging markets equities, anticipating a gradual recovery as global economies emerge from coronavirus-related shutdowns.
AstraZeneca, a drug maker company, said it resumed the British clinical trials of its COVID-19 vaccine, one of the most advanced in development. After their announcement, the U.S. stocks have gained.
Gold prices jumped 0.3%, extending a sharp rise in the previous session.
The dollar index is dipping further from a one-month high of 93.664 touched last week, with its low of 92.695 seen as immediate support. At the time of writing the dollar index slipped to 93.029.
The euro has gained for four straight sessions, reaching $1.1867. Against the safe-haven yen, the dollar traded at 105.73 yen, having touched a two-week low of 105.55 yen on Monday. Brent crude was down 3 cents, or 0.1%, at $39.58, reversing earlier gains. The U.S. West Texas Intermediate (WTI) crude futures were down 2 cents, or 0.1%, at $37.24 a barrel.
Economic Calendar Highlights
UK: Average Earnings Index + Bonus (Jul): 7:00am
The Average Earnings Index measures change in the price businesses and the government pay for labor, including bonuses. The Average Earnings figure gives us a good indication of personal income growth during the given month.
A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.
UK: Claimant Count Change (Aug): 7:00am
Claimant Count Change measures the change in the number of unemployed people in the U.K. during the reported month. A rising trend indicates weakness in the labor market, which has a trickle-down effect on consumer spending and economic growth.
A higher than expected reading should be taken as negative/bearish for the GBP, while lower than expected reading should be taken as positive/bullish for the GBP.
EUR: German ZEW Economic Sentiment (Sep): 10:00am
The German Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment Index gauges the six-month economic outlook. A level above zero indicates optimism; below indicates pessimism. The reading is compiled from a survey of about 350 German institutional investors and analysts.
A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.