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Asian stocks thrown up as China returns on political support hope

TOKYO (Reuters) – Asian stocks rallied on Monday when Chinese markets rose to the hope of more political support for the slow economy, but surprisingly weak US labor data cast doubt on the strength of the world economy and limited gains.

A pedestrian holding an umbrella passes an electronic card showing graphs of the latest fluctuations in Japan's Nikkei average outside a brokerage in Tokyo, Japan, January 18, 2016. REUTERS / Yuya Shino

European shares were seen increasing, with spread-betters expecting the UK's FTSE to increase 0.7 percent, France's CAC 0.6 percent and Germany's DAX 0.5 percent.

MSCI's widest index of Asia-Pacific shares outside Japan increased by 0.4 percent, equivalent to a quarter of Friday's 1.6 percent fall, the second largest decline so far this year.

Japan's Nikkei got 0.5 percent after four consecutive red sessions last week. [.T]

China's blue chip CSI300 index was 1.3 percent after Friday's 4.0 percent drop, which was triggered after CITIC Securities issued a rare "seller" rating on a large insurance company and at a clampdown on the gray market, margin financing. [.SS]

"The volume of trade is rising while foreign investors have sold late last week," said Naoki Tashiro, president of TS China Research, adding that private investors buy Chinese stocks.

China's central bank on Sunday promised further support by tracking loans and lowering borrowing costs.

Chinese data released during the weekend were slightly weaker than expected, but hopes for more political easing would probably throw up.

New bank loans in China fell slightly more than expected in February from a record last month, while growth in the money supply also missed forecasts.

India's NSE index rose 1.0 percent near six-month highs after a general election was launched on April 11, hoping Prime Minister Narendra Modi would probably benefit from tensions with Pakistan.

Wall Street's main indices achieved their largest weekly decline since the market tumbled at the end of 2018 last week, falling for the fifth consecutive day on Friday on shocking wage data.


The US economy created only 20,000 jobs in February, the weakest reading since September 2017. As a result, bond yields fell, while the 10-year treasury yields a two-month low of 2.607 percent. It last stood at 2,638 percent.

The two-year return also hit a two-month low of 2,438 percent, which is close to today's Fed fund rate of around 2.40 percent.

Fed fund futures are pricing in more than 20 percent chance of a fall this year.

"The headline reading was so weak that the market could have reacted more aggressively. I would say that the markets reacted relatively quietly because there were elements that indicate weakness, are temporary," says Tomoaki Shishido, interest rate strategist at Nomura Securities.

While job growth was weak, increased average hourly wage growth by 11 cents, or 0.4 percent, and increased the annual increase to 3.4 percent, the largest gain since April 2009.

January 1230 GMT retail figures are a key focus given its December reading was surprisingly weak.

Fed leader Jerome Powell said on Friday that the central bank will be careful not to shock financial markets as it stabilizes its bond portfolio and says it does not see US economy issues guaranteeing an immediate change in its policy.

He also said the new normal for Fed's total obligations may lie in the ballpark of 16.5 per cent of GDP. rer now expects the Fed to reveal a plan to end the balance during the next week.

Investors are cautiously optimistic that Washington and Beijing will hamper an agreement to eliminate tariffs. A senior Chinese official said on Saturday China and the United States are still working day and night to reach a trade agreement.

But doubts creep in as there is no clarity when the leaders of the two countries can meet to seal offers.

In the foreign exchange market, the euro changed little to $ 1.1388 and kept some distance from Thursday's $ 1.1765 hit by the European Central Bank's surprisingly stupid stance. It was the lowest since late June 2017.

The dollar was soft at 111.15 yen, and had peaked at a 2-1 / 2 month high of 112,135 last Tuesday.

The British pound was wobbly at $ 1,2984, down 0.3 percent.

It had fallen to a three-week low of $ 1,2945 earlier Monday on nervousness ahead of a decisive week in Britain's troubled political debate on EU membership, with Parliament expected to reject Prime Minister Theresa Mays agreement in a vote Tuesday.

If that happens, legislators will vote the next day to leave without agreement on March 29. If they reject it, they will vote for a "limited" delay on Thursday.

Oil prices rose from comments by Saudi oil minister Khalid al-Falih that an end to OPEC-led supply savings was unlikely before June and on a report of falling US drilling activity.

US .. Raw futures in West Texas Intermediate (WTI) increased 0.5 percent to $ 56.35 per barrel. Brent futures went up 0.4 percent to $ 62.98 a barrel.

Editing by Sam Holmes & Kim Coghill

Our Standards: Thomson Reuters Trust Principles.

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