Asian markets edge up to extend eurozone rally
HONG KONG: Asian markets mostly rose Monday, extending a rally in world stocks sparked by last week’s deal to help the embattled eurozone, but negative Chinese manufacturing data weighed on investors.
But the euro fell against the dollar following a jump on Friday after an EU summit vowed fresh aid to the eurozone, with investors acting cautiously as details of the deal to shore up the currency bloc remained unclear.
Tokyo edged up 0.16 per cent, helped by a survey showing improved business sentiment, while Sydney rose 1.21 per cent and Seoul was up 0.24 per cent.
Shanghai edged up 0.05 per cent, with gains on the eurozone deal capped by data released at the weekend showing a drop in the country’s manufacturing activity. Hong Kong was closed for a public holiday.
“After an initial bout of delight, markets settle into a cautious optimism this morning,” National Australia Bank said in a note.
“The European Summit concluded without agreement on the long-term details (fiscal union etc.), but did offer relief for Spain and Italy with direct bank funding” from the eurozone bailout fund, it said.
World stock markets, the euro and oil all jumped on Friday after the EU summit in Brussels delivered surprise emergency measures to help the eurozone debt crisis, in particular allowing aid to crisis-hit Italy and Spain.
Asian markets posted gains of between 1.0 and 2.0 per cent, and European markets rose even more sharply, with Milan rocketing 6.6 per cent, and Madrid and Athens both surging 5.7 per cent.
In the US the Dow jumped 2.2 per cent and the Nasdaq 3.0 per cent.
But fresh bad news from China tempered investors’ enthusiasm Monday.
Official data released Sunday showed manufacturing activity fell to a seven-month low in June, the latest evidence of a slowdown in the world’s second-biggest economy.
The official purchasing managers’ index (PMI) slipped to 50.2 last month from 50.4 in May, industry group the China Federation of Logistics and Purchasing said.
A PMI reading above 50 indicates expansion, while a reading below 50 means contraction.
But Japan provided a bright spot Monday, with a central bank survey showing sentiment among large manufacturers in the world’s third-biggest economy improved in the quarter ended June, although confidence remained weak.
Large manufacturers’ sentiment rose to “minus one” from “minus four” in the previous quarter, according to Bank of Japan’s Tankan survey.
On currency markets Monday, the euro eased to $1.2616 and 100.65 yen, from $1.2654 and 101.02 yen in New York late Friday. The dollar was quoted at 79.78 yen, slightly weaker from US trade.
On oil markets, crude slipped on the weak data from China, the world’s biggest energy consumer, and profit-taking after Friday’s rises.
New York’s main contract, light sweet crude for August delivery, fell $1.03 to $83.93 a barrel and Brent North Sea crude for delivery in August shed $1.23 to $96.57.
Gold rose to $1,594.11 an ounce at 0400 GMT, compared with $1,579.62 an ounce late Friday.