Asian stock rally fades even as oil extends gains

Sydney - A rally in Asia-Pacific equities faded as Japanese stocks pared gains and Chinese shares slumped. Oil touched $49 a barrel and the dollar weakened for a fifth straight day.

Japanese shares trimmed an advance after the Nikkei 225 Stock Average came within two points of the 20,000 level. Chinese shares fell at the close of a global forum in Beijing, further damping an oil-fuelled rally that sent the S&P 500 Index above 2 400 for the first time.

Crude continued to climb, rising for a fifth day after Saudi Arabia and Russia supported an extension of output cuts. The yen strengthened with the Mexican peso and South Korean won.

Global equities climbed to a record on Monday amid optimism over China’s sweeping plan to boost global infrastructure that was unveiled in Beijing. The surge in oil added to the bullish sentiment, even as concern grows over the strength of the global economy.

Chinese industrial production and retail data came in weaker than expected Monday, after American retail sales and inflation also cast a shadow on growth.

Investors are also focusing on corporate results, poring over retailer earnings in the US and megabanks in Japan. Political concerns continue to weigh on the markets. Traders are watching to see if Donald Trump will deliver on his economic agenda, while his administration becomes embroiled in controversies over the firing of FBI Director James Comey and reports the president revealed sensitive information to a Russian diplomat.

Here’s what investors will be watching Tuesday:

UK inflation data, Germany’s ZEW confidence gauge and gross domestic product figures for the euro area. In the US, industrial production and housing starts. IEA estimates of April Opec production.

Here are the main movers in financial markets:

Stocks

The MSCI Asia Pacific Index added 0.1% as of 1:36 in Tokyo, trading near the highest level since May 2015. Japan’s Topix rose 0.2%, paring an earlier gain of 0.7%. The Nikkei 225 climbed to as high as 19 998.49 before pulling back. Australia’s S&P/ASX 200 was up 0.1%, after gaining as much as 0.6%.

China shares traded in Hong Kong retreated 0.6% after surging 1.6% on Monday amid optimism over Beijing’s infrastructure spending program.

The Shanghai Composite Index slumped 0.3% and the Hang Seng Index also lost 0.3%. Futures on the S&P 500 Index fell less than 0.1% after the benchmark gauge advanced 0.5% on Monday.

Commodities

Oil added 0.2% to $48.94 a barrel after surging 2.1% on Monday. Gold rose 0.2% to $1 233.72 an ounce, up for a fourth session.

Currencies

The Bloomberg Dollar Spot Index slid 0.1%, falling for a fifth day. The yen rose 0.3% to 113.51 per dollar, after dropping 0.4% on Monday.  The South Korean won increased 0.5% to the highest since April 4, while the Mexican peso added 0.3%.

Bonds

The yield on 10-year Treasuries fell one basis point to 2.33%, after climbing two basis points on Monday. Australian benchmark yields lost one basis point to 2.58%, stretching declines to a fifth straight day.