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Asian Stocks Gain Despite Oil-Price Rise, Many Markets Shut

Asian Stocks Gain Despite Oil-Price Rise, Many Markets Shut

David Cottle, Analyst


Talking Points

  • Asian stocks inched up despite a rise in oil prices
  • The Euro showed little reaction to news that two small Italian banks will be bailed out
  • Investors are looking to US and European economic numbers later in the week

Get the trading community’s take on your favourite Asia Pacific currencies, as well as those you’re not so fond of, at the DailyFX Sentiment Page

Asia/Pacific markets rose slightly Monday despite a rise in oil prices from last week’s ten-month lows and a weaker US Dollar.

Many countries saw market closures for public holidays, notably Malaysia, Singapore and the Philippines. However, the Nikkei was open and ended up 0.1%, with Sydney's ASX 200 up by 0.04%. Chinese stocks did better, with Shanghai rising 0.6% and Hong Kong up 0.5%.

The US Dollar started the session broadly weaker against major rivals, reportedly as investors increasingly doubt whether US interest rates will rise this year. This prognosis could well support Asian stocks as there have been some worries about lower US Dollar liquidity in the region and elsewhere as US monetary policy tightens. However, the greenback picked up a little steam through the Asian day, probably also supporting Asian stocks as it did so.

Gold prices inched lower but investors reportedly remain cautious about riskier assets this week ahead of a flurry of US economic data. Crude oil prices gained more than 1% across the board largely thanks to that weaker Dollar. The markets’ old worries about entrenched oversupply endure, however.

The San Francisco Federal Reserve President John Williams said that he still favours gradual rate increases from here, forecasting that unemployment will continue to fall. The Yen weakened a little following the release of the Bank of Japan’s Statement of Opinion from Mid June’s monetary policy meeting. There was nothing new here, but the BoJ is clearly not minded to exit from extraordinary stimulus anytime soon. The Euro showed little reaction to news that Italy’s government is bailing out two Venetian regional banks at a cost of EUR5.2 billion (US$5.82 billion).

The rest of Monday’s global session will bring Germany’s important Ifo sentiment indicator and US durable goods orders. European Central Bank President Mario Draghi is having a “youth dialogue” in Lisbon, but the extent to which his audience will grill him on monetary policy is unclear.

--- Written by David Cottle, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.