SINGAPORE — Industrial metals prices extended their gains on Tuesday with expectations of a worldwide manufacturing rebound, while Asian shares crept up a little more cautiously ahead of this week’s US consumer price index (CPI) data and a crucial European Central Bank (ECB) meeting.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%. Japan’s Nikkei rose 0.8%. S&P 500 futures and FTSE futures were flat while European futures were down 0.18%.
In Shanghai, the most-traded May copper futures rose more than 1% to a record high, while zinc and tin made multi-month peaks and aluminium traded just below Monday’s two-year top.
Even iron ore, battered by China’s property downturn, steadied above $100 a ton in Singapore.
“It’s pretty much a China bet,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore.
“It’s coincided with a global manufacturing bottoming, and I think that plays well into China’s industrial recovery. That aspect of it is a broader-based story for metals.”
Last week, data showed US manufacturing growing for the first time in one-and-a-half years. China’s manufacturing activity expanded for the first time in six months in March.
Among Asian bourses, Taiwan stocks touched a record high, led by a more than 4% jump in shares of TSMC after the world’s largest contract chipmaker won a $6.6-billion subsidy for an Arizona production plant.
Chinese stocks were more circumspect, with mainland indexes marginally lower and Hong Kong’s Hang Seng up 0.7%, though proxies outside China from European stock markets to the Antipodean currencies have been standout gainers.
China’s yuan, down about 1.8% this year, has found a floor around 7.3 to the dollar.
Since the beginning of March, the EuroSTOXX index has risen 2.3% and Germany’s DAX is up 3.2%. The Nasdaq has been flat and the Nikkei has lost 1%.
CPI AND ECB AHEADThe main focus this week is on US inflation data due on Wednesday and the ECB meeting on Thursday.
Ahead of Wednesday figures that are expected to show a slight tick higher in annualized US headline inflation, the shift in the rates outlook has driven up yields and pumped up US dollar long bets to levels starting to look stretched.
Meanwhile, the euro traded firmly in Asia at $1.0860 ahead of a Thursday policy meeting where investors expect the European Central Bank to flag a cut in June, but might see some risk that they strike a hawkish tone instead.
The yen, meanwhile, continues to face heavy pressure as investors see any lags in global rate cuts as leaving the gap wide with Japan’s near-zero interest rates.
At 151.87 per dollar, the yen is a whisker from last month’s 34-year low of 151.975. Against the euro, the yen is at its weakest for three weeks at 164.96. — Reuters
