Asian stocks lifted by Wall Street gains

Asian shares began a central-bank focused week on firm footing on Monday, buoyed by gains on Wall Street and glimmers of strength in weekend data from China. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1 per cent, while Japan’s Nikkei stock index added 1.8 per cent.

In China, the blue-chip CSI300 index rose 2.7 per cent, while the Shanghai Composite Index .SSEC gained 2.6 per cent, after both had lost more then 2 percent last week.

The S&P 500 ended at its highest level of the year on Friday as oil prices extended gains and investors reassessed stimulus steps taken by the European Central Bank last week. But global investors are expected to remain cautious ahead of policy decisions by the Bank of Japan on Tuesday, the US Federal Reserve on Wednesday and the Bank of England on Thursday.

The BOJ is expected to keep policy unchanged after stunning markets by adopting negative interest rates in late January. But its board could discuss whether to exempt $90 billion in short-term funds from the BOJ’s newly imposed negative rate, people familiar with the matter said, after the securities industry warned that investment money would be driven into bank deposits. The Fed and BOE are also seen standing pat at their respective meetings later this week, in the wake of the ECB’s move last week to expand its easing programme. “I don’t think investors are expecting anything drastic from the BOJ, especially given the fact that they are meeting before the FOMC and will be reticent about making a big aggressive gamble ahead of a Fed meeting,” said Stefan Worrall, director of Japan equity sales at Credit Suisse.

China data on Saturday showed further weakness in much of the economy, but also contained a few bright spots. Manufacturing output in January and February grew at its weakest pace since 2008, while retail sales rose at their slowest rate since May 2015. But fixed-asset investment, a crucial driver of the economy, gained 10.2 per cent in the first two months compared with the same period a year earlier. “Chinese data showed further weakening across the board, but it is clear that government spending and a recovery in the real estate market are helping hold up growth,” Angus Nicholson, market analyst at IG Markets, said in a note to clients. “China looks to be returning to a very familiar investment and real estate-driven growth pattern, somewhat at odds with their claims of economic rebalancing,” he said.

People’s Bank of China (PBOC) Governor Zhou Xiaochuan said over the weekend that central bank won’t resort to excessive stimulus to bolster growth but will keep a flexible stance in the event of an economic shock. The dollar was steady against a basket of currencies, with the dollar index at 96.179, holding above a one-month low of 95.938 touched on Friday.

Against the yen, the dollar edged down slightly to 113.81 , though it remained within its recent ranges. The euro added 0.1 per cent to $1.1159, well above last week's low of $1.0821 plumbed after the ECB's stimulus expansion. US crude oil prices gave back some last week's gains on Monday, after marking sharp rises on Friday after the Paris-based International Energy Agency said the market may have hit bottom. US crude slipped about 0.3 per cent to $38.39 a barrel after rising 2 per cent on Friday, when it hit a 2016 high and also logged its fourth straight gaining week.

Brent erased early losses and edged up about 0.2 per cent to $40.46 a barrel after gaining nearly 1 per cent in the previous and 4 per cent for the week, its third weekly gain in a row.

Reuters