Asian shares crept higher Tuesday boosted by optimism that the global economy is in a growth trajectory based on the manufacturing data obtained from China, Japan and the US. The figures compensate for the disappointing euro zone data which experts have described as ‘gloomy’. Euro zone PMI dipped to 52.8 in June from 53.5 where it was in May.
Many markets across the region pushed ahead despite a sluggish start, driving the MSC’s broadest index up by 0.4 percent. Japan’s Nikkei and Shanghai went up by 0.05 percent and 0.2 percent respectively. South Korea led the pack with and increase of 1 percent, attributable to Hyundai Motor Co and Samsung Electronics.
Hyundai Securities market analyst Bae Sung-young said that market heavyweights like Hyundai Motor Co and Samsung Electronics closely follow global economic recovery, and that the surveys in China and U.S. on the manufacturing industry have shown positive signs.
Market analysts say there is a lot of optimism given that the data from U.S., China and Japan all showed positive signs in the month. And it is interesting to note that U.S. PMI peaked 57.5 in four years! The PMI is usually reliable and timely. It is the one that is keenly monitored by economists as an indicator of output levels and trends.
According to David Hensley, an economist at JPMorgan, the PMI’s reflect acceleration in global industrial output at rate that can be as much as 5 percent per annum. He added that any increase in global economy would be confirmed in Asia since it lies in the center of global manufacturing and it is an emerging economy.
Hensley added that the continued recovery in China’s PMI is a positive sign on its own and also because China’s survey is typically aligned with the broader EM complex, and that the trend in official data for EM Asia ex China remains murky.
These impressive data did not help matters on the Wall Street where S&P 500 went down by 0.01 percent, the Dow dipped by 0.06 percent, while the Nasdaq only increased by 0.01 percent.
Financial spreadbetters were expecting that Germany’s DAX, France’s CAC 40 and Britain’s FTSE 100 would all start a little bit higher on Tuesday.
As the data from China promoted currencies that are commodity-exposed like the Australian dollar, the gloomy euro zone PMI’s had a negative impact on the euro.
The Aussie hit a three-month peak overnight exchanging at $0.9421, while the euro remained flat at $1.3594. The common currency exchanged at 138.58 against yen and at 101.95 against the dollar.
A look at the commodity markets reveals the price of platinum eased as the miner’s strike in South Africa was called off by their union, while the price of gold was high due to geopolitical tensions more so the increasing violence in Iraq. Spot gold sat tight at $1314.60 an ounce as the market was consolidating its last week 3 percent jump.
Brent went down 0.2 percent to $113.89 a barrel edging back from its nine-month highs amid fears that Sunni Islamist insurgency in Iraq might cut the country’s oil exports. U.S. crude for August delivery also went down by 0.48 percent to $105.66.