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Hong Kong - Asian stocks rose from a one-month low as the Japanese yen fell and commodity prices rallied. Australia’s dollar rebounded from its weakest level in more than two months and crude oil climbed to the highest since November.
Hong Kong’s shares gained on speculation progress will be made on a new exchange trading link with China, while Shanghai stocks fluctuated near a two-month low after a raft of disappointing data. European stock index futures fell and S&P 500 contracts rose.
The Bloomberg Dollar Spot Index climbed to this quarter’s high after a jump in American retail sales bolstered the case for the Federal Reserve to raise interest rates. The zloty rose after Moody’s Investors Service refrained from downgrading Poland.
Oil traded near $47 a barrel after Goldman Sachs raised its price forecast and metals advanced.
The pickup in raw-materials prices is providing some relief to global equities after about $1.8trn was wiped off the value of the securities in the first two weeks of May as economic data and earnings reports weighed on investor sentiment.
China’s central bank issued a weekend statement saying monetary policy would continue to support growth, after data on new lending, retail sales, industrial production and fixed-asset investment missed economists’ estimates.
“Global growth remains fragile and uncertainty lingers around the Fed and China,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $116bn. “A June or July Fed rate hike still looks unlikely, but there is a reasonable chance of a September hike.”
The odds of a US rate increase by September are 34%, Fed Funds futures show. BlackRock - the world’s biggest money manager - turned bearish on short-term US Treasuries last week, saying traders have gone too far in discounting the chances of a rate hike this year.
Japan’s economy will be in focus this week, with a gross domestic product report forecast to show the country narrowly avoided falling into a recession in the first quarter. Thailand reported better-than-expected economic growth on Monday, while Russia and Israel may also release details of how they performed in the period.
Stocks
The MSCI Asia Pacific Index gained 0.4% as of 08:13. Hong Kong’s Hang Seng Index rose 1.2% from a two-month low amid speculation China’s state leader Zhang Dejiang will give clarity on the start date for an exchange trading link with Shenzhen when he visits the city this week. Hong Kong’s Chief Executive Leung Chun-Ying said last week he hoped China would announce a start date as soon as possible.
"Hong Kong stocks are rebounding from oversold levels, as investors hope for favourable measures to be announced" during Zhang’s visit, including progress on the Shenzhen link, said Ronald Wan, chief executive at Partners Capital International in Hong Kong.
Japan’s Topix index climbed as much as 1% before surrendering almost all of its gains. Prime Minister Shinzo Abe will postpone a planned sales tax hike as the economy struggles and the country recovers from earthquakes in the southern part of the nation last month, the Nikkei newspaper reported over the weekend.
Mirae Asset Securities jumped 13% in Seoul and Daewoo Securities surged almost 7% after the two brokerages announced terms of a proposed merger. Honda sank for a fourth day after the company forecast a smaller profit than analysts expected.
Futures on the S&P 500 gained 0.2% and contracts on the Euro Stoxx 50 Index declined 0.2%.
Currencies
The Bloomberg Dollar Spot Index held near its highest close since March as the greenback gained 0.1% versus the Japanese yen. US retail sales climbed in April by the most in 13 months and a gauge of consumer confidence surged in early May to an almost one-year high, reports showed on Friday.
The won sank 0.7% versus the greenback as China’s data dimmed prospects for exports to South Korea’s biggest export market. Malaysia’s ringgit weakened as much as 0.5%, before paring losses as oil rallied. The Southeast Asian nation is the region’s only major net exporter of crude. The yuan rose less than 0.1%.
“Weakness in the latest Chinese economic figures has dampened appetite for emerging-market assets,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “Retail data renewed speculation of a US rate hike, and this has turned the dollar stronger.
The baht strengthened as much as 0.3% after the release of Thailand’s GDP data. The economy expanded 3.2% in the first quarter from a year earlier, more than the 2.8% growth forecast in a Bloomberg survey.
Poland’s zloty climbed 0.7% against the dollar after Moody’s surprised most analysts by leaving Poland’s credit rating unchanged at a review. The assessment was kept at A2, the fifth-lowest investment grade, though the outlook was lowered to negative for the first time in a decade.
Commodities
Crude oil rose 1.2% to $46.75 a barrel in early trading Monday, after Friday’s 1.1% loss. China’s refineries processed crude at record rates in April, helping ease a supply glut as the number of active rigs in the US declines.
Goldman Sachs raised its oil-price forecast for the second half to $50 from a March estimate of $45, saying the market has flipped to a deficit sooner than it had expected.
Aluminum rose as much as 1.4% in London after weekend data showed China’s primary output of the metal slipped 1.2% in April from a year earlier. Gold added 0.6%, while silver gained 1.1%.
Bonds
The yield on Australia’s 10-year sovereign bonds fell to a record-low 2.2%, 32 basis points below its level at the end of April.
The Reserve Bank of Australia, which this month cut its benchmark interest rate to an unprecedented 1.75%, has said core inflation will probably miss the bottom of its 2% to 3% target range this year and may undershoot into the middle of 2018.
The yield on US Treasuries due in a decade rose one basis point to 1.71%, after sliding by five basis points on Friday.
