Asia shares rally on promise of rate relief, factory pick up

Asian equity markets gathered on Monday while investors were looking forward to a drop in rate in Europe,

and most likely Canada, as the next stage in the relaxation of global policy, although sticky inflation threatens to Make the process a business.

There were also better news from China because the private Caixin Survey showed care in its main factory index at a 51.7 two -year summit in May, against 51.4 in April. Japanese industrial employment increased for the first time in a year in May, while employment in South Korea grew the fastest in two years.

All of these factors helped MSCI’s Asia-Pacific index outside Japan gain 1.4%, after a 2.5% drop the previous week. Chinese stocks gained 0.3%.

Japan’s Nikkei rose 1.1%, up from Friday’s one-month low, while South Korea gained 1.8%. South Korean President Yoon Suk-yeol on Monday highlighted the possibility of large oil and gas reserves in the country’s east coast.

The Indian market is waiting to see if Prime Minister Narendra Modi will expand the number of members in the parliament when the election results are released on Tuesday, although it is expected that this will lead to a change in the economy. EUROSTOXX 50 STXEc1 futures rose 0.9% and FTSE FFIC1 futures 0.7% as risk appetite widened.

The month-end close saw Wall Street close late Friday and leave the Nasdaq down nearly 7% for the month of May. Early Monday, S&P 500 ESc1 futures were up 0.2%, while Nasdaq NQc1 futures added 0.1%.

The prospect of lower mortgage rates around the world is already positive for stocks. The ECB will defeat the Fed

The European Central Bank (ECB) is seen as close to cutting rates by a quarter to 3.75% on Thursday, the first time in history that it has cut rates in face the US Federal Reserve.

However, the euro zone’s surprise inflation figures released last week dashed hopes for a faster rate cut and the market has held on to an easy rate of 57 basis points for this year. “The likelihood of it falling further now is small, leading to a second in September,” said Bruce Kasman, head of economic research at JPMorgan.

“We believe that Prime Minister Christine Lagarde will indicate that rates are falling next week, but the monetary policy statement will emphasize that future measures are based on data and that there is no Any prior guarantee of the same rate.

The market also considers an 80% chance that the Bank of Canada will cut rates at its meeting on Wednesday and 59% chance of easing this year, although analysts expect that the easing will be more deeper. Investors have little interest in the Fed, seeing little chance of action before September and even that is far from a done deal.

The opinion may change this week as the expected data includes the main survey on employment and production, as well as the May employment report, where unemployment is expected to hold at 3.9% to 190 000 net new jobs are created. In the foreign exchange market, the Japanese yen is still the weakest of the main currencies, although the government is willing to spend a lot of money to reduce its fall. Data released last week showed Tokyo spent 9.788 billion yen ($62.27 billion) on investment between April 26 and May 29. The dollar stood at ¥157.09 JPY=EBS, close to last week’s high of 157.715. The Euro is stable at US$1.0855. EUR=EBS, still benefiting from the EU inflation report, but faced resistance at US$1.0895. Gold was steady at US$2,330 an ounce XAU=, after rising for four straight months, helped in part by purchases from central banks in China.

Oil prices have recovered from an early rise on Monday after OPEC+ agreed on Sunday to extend most of its oil cuts until 2025, although some cuts will begin to resume from October 2024.

Brent LCOC1 increased from 38 cents to US $ 81.49 per barrel, while the American crude CLC1 missed 39 cents at US $ 77.38 per barrel.

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