By Tom Westbrook
SINGAPORE (Reuters) – Industrial metals prices extended their gains on Tuesday on expectations of a global manufacturing recovery, while Asian shares rose a little more cautiously ahead of U.S. inflation data this month. week and a crucial meeting of the European Central Bank.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%. increased by 0.8%. and remained stable while European futures fell 0.18%.
In Shanghai, the most-traded month of May rose more than 1% to a record high, while zinc and tin posted multi-year highs and aluminum traded just below Monday’s two-year high. [MET/L]
Iron ore, hit by the Chinese property crisis, also stabilized above $100 a ton in Singapore. [IRONORE/]
“It’s basically a Chinese gamble,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore.
“It coincided with a global manufacturing bottom, and I think that plays a positive role in China’s industrial recovery. This is a broader story for metals.”
Data on Monday showed German industrial production rose more than expected in February.
Last week, data showed that the US manufacturing sector grew for the first time in a year and a half. In March, Chinese manufacturing activity grew for the first time in six months.
Among Asian stocks, Taiwanese shares hit an all-time high, led by a more than 4% jump in TSMC shares after the world’s largest contract chipmaker won a 6.6 billion subsidy. dollars for a manufacturing facility in Arizona.
Chinese stocks were more cautious, with mainland China indexes slightly lower and Hong Kong index up 0.7%, even as proxies outside China, from European stock markets to Antipodean currencies, declined. had notable gains.
The Australian dollar rose nearly 2% in a week and traded at $0.6605 on Tuesday. The New Zealand dollar hit a two-week high of $0.6047 in morning trade.
down about 1.8% this year, it found a low around 7.3 for the dollar.
Since the beginning of March the EuroSTOXX index has grown by 2.3% and 3.2%. The Nasdaq was flat and the Nikkei lost 1%.
CPI AND ECB AHEAD
The main focus this week is on the US inflation data due on Wednesday and the European Central Bank meeting on Thursday.
Expectations for US rate cuts have evaporated this year and investors are now not even sure whether there will be two 25 basis point cuts this year or three, after January prices implied six expected cuts.
Ahead of Wednesday’s data, which is expected to show a slight rise in annualized US headline inflation, the change in rate outlook has pushed yields higher and inflated long bets on the US dollar to levels that are starting to look excessive.
U.S. two-year yields, which track short-term interest rate expectations, hit their highest since late November at 4.801% on Tuesday, while 10-year yields also hit 2024 highs on Monday at 4.46 %. [US/]
“A higher-than-expected reading would add modest support to the dollar, but a downside surprise could see the dollar react more downward,” strategists at OCBC Bank said in a note.
The euro was trading firmly in Asia at $1.0860 ahead of Thursday’s policy meeting where investors expect the European Central Bank to signal a cut in June but may see some risk of it taking an aggressive tone instead.
The yen, meanwhile, continues to come under heavy pressure as investors see any delays in global rate cuts as a wide gap with Japan’s near-zero interest rates.
At 151.87 per dollar, the yen is a whisker away from last month’s 34-year low of 151.975. Against the euro, the yen is at its lowest in three weeks at 164.96.
Japanese Finance Minister Shunichi Suzuki said authorities would not rule out any options in dealing with excessive movements in the yen, repeating his warning that Tokyo was ready to act against the currency’s recent sharp declines.
“We expect (Japan) to intervene above 152, but not immediately on a breakout,” Standard Chartered (OTC:) strategist Steve Englander said in a note to clients.