Asian shares lifted by China data, yen retreats

Tuesday, 3 September 2013 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Asian shares climbed to a two-week high on Monday, and the Australian dollar and copper gained, as China said its manufacturing expanded in August at the fastest pace in more than a year. A delay in potential US military action against Syria, as US President Barack Obama sought Congressional support, also helped boost short-term risk appetite. China’s bullish purchasing managers’ index joined recent positive data from the US and Europe, raising hopes the global economy was on a firmer footing.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.9%, hitting a two-week high and extending a 2.1% rise in the previous two sessions, while Hong Kong’s Hang Seng Index climbed 2%. Japan’s benchmark Nikkei gained 0.9%. Steven Englander, Citi’s global head of G10 FX strategy, recommended investors short the yen on the back of the Chinese figures, the Syrian news, and a panel supporting an increase in Japan’s sales tax. China’s official purchasing managers’ index (PMI) rose to the highest level since last April and topped market expectations. “This will reinforce views of China stabilisation. It is a risk positive, if only because it removes some of the short-term risk that the China slowdown could spiral further downwards,” Citi’s Englander wrote in a note. A separate manufacturing PMI report from HSBC, released on Monday, showed activity in privately-owned factories increased over August for the first time in four months.

The yen had risen recently on heightened geopolitical tensions and as investors dumped emerging market currencies to position themselves for the US Federal Reserve to begin reducing stimulus, perhaps from its meeting later this month. On Monday, the yen slipped 0.4% to 98.48 yen to the dollar, pulling well away from last week’s low of 96.81, and eased 0.2% to 129.995 to the euro. The Australian dollar, which is seen as a proxy for Chinese growth because of the two countries’ close trade ties, rose 0.6% to $ 0.8961. Against a basket of major currencies, the US dollar held steady at a four-week high. Trading activity was likely to be light with US markets closed for the Labour Day holiday. Buoyed by the factory activity data from top-consumer China, copper prices rose 1.8% and were on track to end a four-day losing run. Oil and gold prices fell as investors unwound their positions after the US delayed a military strike against the Syrian Government, which is accused of using chemical weapons against civilians. Brent crude prices dropped 1% to below $ 113 a barrel, on track for a third-day of decline. They touched a six-month peak of $ 117.34 last week on concerns that a US military intervention could lead to retaliation and disrupt crude supply in the Middle East region, which pumps a third of the world’s oil. Safe-haven gold shed 0.4% to around $ 1,390 an ounce, hitting a one-week low.