Asian stocks edge up on hopes of China stimulus

Asian stocks edged higher overnight in a cautious start to the week, with investors holding out hope that China would take steps to stimulate its economy.

European shares were also set for a higher start, with financial spreadbetters expecting Britain’s FTSE 100 to open up by 9-11 points, Germany’s DAX by 34-43 points and France’s CAC 40 by 9-12 points.

US stock futures rose 0.4 per cent, pointing to modest gains on Wall Street later in the day. MSCI’s broadest index of Asia-Pacific shares outside Japan tacked on 0.4 per cent, after rising to a three-week high on Friday on heightened speculation Beijing will launch new spending measures and on reduced tensions in Ukraine. Tokyo’s Nikkei stock average rose 0.7 per cent.

China’s Premier Li Keqiang on Friday sought to reassure jittery global investors that Beijing was ready to support the cooling economy, saying the government had the necessary policies in place and would push ahead with infrastructure investment. China stimulus hopes were unable to shore up all equity markets in Asia, however, with South Korea’s KOSPI trading nearly flat.

“It’s difficult for the market to solely move on talks about stimulus with no concrete plan to back them up,” said Kim Yong-goo, an analyst at Samsung Securities in Seoul.

The euro lingered near a one-month low hit against the dollar on Friday after an unexpected drop in Spanish and German inflation bolstered expectations the European Central Bank could further ease monetary policy as early as Thursday. "It all depends on whether the ECB views the recent slowdown as a temporary pullback or a deeper problem. Given the abundance of policymakers talking about the possibility of negative rates, we believe they are growing more concerned about growth and inflation," Kathy Lien, managing director at BK Asset Management in New York, wrote in a note to clients.

Turkey’s lira hit a two-month high against the dollar after Prime Minister Tayyip Erdogan declared victory in local polls that had become a referendum on his rule, stirring hopes months of political turbulence would ease. The lira brushed 2.165, its strongest against the greenback since late January.

The dollar drew support from a rise in US Treasury yields, which were underpinned by expectations that the Federal Reserve will continue to taper its massive stimulus programme and pave the way for an eventual rate hike.

The dollar was nearly flat at 102.84 yen, hovering below a two-week peak of 102.98 reached on Friday. In commodities markets, gold remained under pressure amid an improvement in risk appetite following upbeat US consumer spending data that brightened prospects for the economy. Spot gold traded at $1,296.50 an ounce, near a six-week low of $1,285.34 hit on Friday.

Simmering tensions between Russia and the West and disruptions to African oil supplies helped US crude trade near a three-week high. US crude for May delivery edged down 30 cents to $101.37 a barrel after settling on Friday at its highest since March 7th.

Reuters