Talking Points
- Many Asian markets were closed for the May 1 holiday break, but those which were open rose
- News that the US Congress had reached a deal which exorcises the specter of a Federal shutdown this week helped
- The British pound was whacked by the apparent hardening of Brexit rhetoric
Asian stocks managed gains on Monday, although many bourses including those in China were out for the May 1 holiday.
Shares like Tokyo Electronics and Murata Manufacturing pleased investors with earnings numbers. This saw the index overcome a shaky start to end up 0.6%. The ASX was open too and also ended higher, to the tune of 0.4%. Aussie conglomerate Wesfarmers gained sharply amid talk that it will raise more than A$1.15 billion (US$1.12 billion) from the Initial Public Offering of its Officeworks division.
Asian shares took initial cues from Wall Street which closed lower thanks to lackluster Gross Domestic Product data out of the US on Friday. However, local stocks perked up on news that Congress had at last reached a deal to fund the Federal Government though September, averting the possibility of a shutdown.
This news also perked the US Dollar up, especially against the British Pound which came under renewed Brexit pressure as weekend press reports seemed to show rhetoric hardening on both sides. GBP/USD remained above 1.29 as the Asian session wound down, however, but only just. The Australian Dollar lost some ground, seemingly as a private inflation measure showed some weakness in its “trimmed mean” version, although it made much of it back into the session close.
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Strength in Australian manufacturing seemed to pass the currency by however, possibly as investors hunker down for Tuesday’s monetary policy decision from the Reserve Bank of Australia. It isn’t expected to move the key Official Cash rate from its 1.50% record low.
Gold prices continue to suffer from a general investor preference for riskier assets, but they didn’t fall far on Monday. Crude oil prices were also down but only by a few cents in markets which looked holiday-hit.
The rest of the global day will have a US flavor, with many European markets out. Official data on US consumption expenditure are due, as is the manufacturing index from the Institute for Supply Management.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
