Asia shares up as China extends rally; Japanese yields a risk

Sydney, July 31 (BNA): Asian shares looked to end the month on a firm note on Monday in a week littered with major economic releases, central bank meetings and earnings updates from mega caps Amazon and Apple, though rising Japanese bond yields posed a risk.

 

China surveys were mixed with factory activity just pipping forecasts but services disappointing, though both merely reinforced expectations that Beijing would have to launch a larger stimulus at some point.

Chinese blue chips seemed unperturbed and added 1.6%, bringing gains for July to 5.6%, reports Reuters.

 

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.1%, having gained almost 6% so far in July to reach a five-month high.

 

The initial impetus for markets was positive following Friday’s U.S. data showing an easing in wage costs and core inflation, which fuelled hopes the Federal Reserve was done tightening.

 

“The data surprises bolster confidence that global core inflation – ex. China – will fall sharply and set the stage for a developed market central bank policy pause and emerging market easing even if growth remains firm,” said Bruce Kasman, head of economic research at JPMorgan.

 

Figures due this week include the U.S. ISM surveys on manufacturing and services, the July payrolls report and European inflation.

 

The Bank of England is widely expected to raise rates by at least a quarter point, but markets are more divided on whether the Reserve Bank of Australia will hike or stay on hold.

 

AHN