Asian shares cautiously push higher
TOKYO (Reuters): Asian shares edged higher on Monday, with investors wary of a deepening crisis in Ukraine and a downbeat China manufacturing survey, while the euro touched a fresh one-year low ahead of this week’s European Central Bank meeting.
Ukrainian President Petro Poroshenko warned a “full-scale war” was imminent if Russian troops continued to advance in support of pro-Moscow rebels, while U.S. and European leaders threatened Moscow with further sanctions.
But Friday’s Wall Street cheer managed to offset the geopolitical concerns and the China survey. U.S. shares climbed ahead of a three-day weekend for Monday’s U.S. Labor Day holiday.
“Naturally, developments between Russia and the Ukraine will be in the cross sights. However, despite more concerning rhetoric that tensions are nearing a point of no return, we haven’t really seen a heavy bias towards defensive trading strategies today,” IG chief market strategist Chris Weston wrote in a note to clients.
Financial spreadbetters predicted flat openings in European markets, with Britain’s FTSE 100 expected to open between 4 points higher and 7 points lower, and both Germany’s DAX and France’s CAC 40 seen opening unchanged to 1 point higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan shrugged off early losses and was up about 0.3%, moving back toward last Thursday’s six-and-a-half-year peak.
Japan’s Nikkei stock average ended up about 0.3%, taking back some of the ground lost in August, when it shed 1.3%.
The gains came even after an official index of China’s manufacturing sector fell from a 27-month high to 51.1 in August, a government study showed on Monday, slightly less than forecast and adding to signs of growing softness in the Chinese economy. Still, it was the second-highest reading this year.
The final HSBC/Markit Purchasing Managers’ Index also dropped, slipping to 50.2 in August, roughly in line with a preliminary reading of 50.3 and only a shade above the 50-point mark that demarcates an expansion in activity from contraction.
“The economy still faces considerable downside risks to growth in the second-half of the year, which warrants further policy easing,” said Qu Hongbin, an economist at HSBC.
But Friday’s gains on Wall Street underpinned markets. The S&P 500 index set a new closing high, ending the day above the 2,000 milestone for the third time. For the month, the Dow Jones industrial average rose 3.2%, the S&P 500 added 3.8%, and the Nasdaq Composite gained 4.8%.
The dollar index edged up to 82.764 in Asian trade, not far from Friday’s 13-month high of 82.773.
Speculators raised their bullish bets on the U.S. dollar for a second week to their highest in more than two years, according to data from the Commodity Futures Trading Commission released on Friday. The dollar’s net long position soared to $32.92 billion in the week ended Aug. 26.
The dollar rose slightly to 104.17 yen, moving back toward last week’s seven-month high of 104.49.
The euro, meanwhile, edged down about 0.1% to $1.3124 after dropping as low as $1.3119 and reaching lows unseen since early September 2013, ahead of the European Central Bank meeting on Thursday.
