Asian shares extend October rally

Asian shares rose on Monday, extending an October rally, as investors hunted for bargains in industrials and basic materials, fuelled by a rebound in commodities while the dollar struggled as hopes of a Fed rate rise this year faded.

European stocks were seen consolidating gains on Monday after a stellar week, with spreadbetters expecting Britain’s FTSE 100 to open down 0.3 per cent. Germany’s DAX was seen opening up 0.1 per cent higher while France’s CAC 40 was seen down 0.1 per cent lower.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6 per cent, extending an impressive 11 per cent rise this month as investors unwound some of their long US dollar and short commodities and emerging markets trades. China shares jumped over 3 per cent on Monday to their highest level in seven weeks after the central bank took fresh steps to inject liquidity into the struggling economy and said the stock market's correction "is almost over". "Any signs of stimulus is being seized by the markets as a sign of stabilisation and there is some bargain hunting, especially in the beaten down sectors, related to commodities," said Nicholas Yeo, head of equities (China/Hong Kong) at Aberdeen Asset Management with assets under management of US$490.8 billion globally.

While Beijing has generally refrained from launching widespread stimulus measures to boost slowing growth, it has resorted to a steady drip-feed of measures in recent weeks to support various sectors ranging from housing to autos, calming investor sentiment, and sparking a rally in the Hong Kong listed shares of Chinese companies. Korea was broadly flat and Jakarta rose 0.8 percent. Japan is shut for a holiday.

In a sign that the sentiment towards emerging markets may have turned a corner, the much-tracked Bank of America Merrill Lynch fund flow report showed that weekly outflows from emerging market funds were at their lowest since July.

The euro was up about 0.1 per cent at $1.13720, consolidating recent gains, while the yen held within recent broad trading ranges carved against the greenback. In commodities, oil prices added to recent gains on Monday after US drillers cut the number of working oil rigs for six straight weeks, while traders awaited Chinese trade data.

US West Texas Intermediate crude futures were trading at $49.93 per barrel, up 0.6 per cent. Brent futures were up 0.4 per cent at $52.84 a barrel. Industrial metals such as copper and zinc got some much needed respite, posting impressive gains last week. The 19-commodity Thomson Reuters/Core Commodity CRB Index rose to its highest level since end-July.

Reuters