Most Asian stocks and currencies bounced on Monday as stimulus measures announced by Shanghai authorities to support the economy boosted risk appetite, while a subdued US dollar also aided gains.
Over the weekend, China inched towards ending a two-month coronavirus lockdown in Shanghai from Wednesday, with city officials introducing an action plan – consisting of 50 policy measures – to revive the country’s commercial hub.
This helped MSCI’s broadest index of Asia-Pacific shares outside Japan jump 2.2% to its highest level in more than three weeks.
The prospect of easing coronavirus curbs, combined with a wave of policy measures from China – including its national 33-point stimulus plan – will take some edge off the adverse impact from its zero-COVID stance, said Vishnu Varathan, an analyst with Mizuho Bank.
The greenback was headed for its first monthly drop in five with investors scaling back bets that rising US rates will spur further gains and as fears of a global recession have receded a little.
This supported broad gains among emerging Asian currencies. Taiwan’s dollar and South Korean won rose 0.6% each to lead advances, while China’s yuan added 0.4%.
Moves in regional equity markets were also led by South Korea and Taiwan, where stock indexes climbed 1.2% and 1.5%, respectively.
Stocks in energy export-oriented Indonesia and Malaysia bucked the broader trend to lose 0.7% and 0.3%, respectively, as Malaysian palm oil futures eased amid uncertainties around the resumption of Indonesian exports.
Indonesia said on Friday it will allocate about 1 million tonnes of palm oil for export, prioritising companies that have been registered for the government’s bulk cooking oil programme, after shipments were allowed to restart from May 23.
Amid a relatively light economic calendar in Asia, market participants will focus on China’s Purchasing Managers’ Index figures for May, due on Tuesday, for fresh clues on economic conditions in the world’s second-largest economy.
“The PMI figure is expected to lift off its April low but will remain in contractionary territory,” IG market analyst Yeap Jun Rong said.
The Indonesian rupiah and the Malaysian ringgit rose 0.2% each, while the Singapore dollar was 0.1% firmer against the US dollar.
HIGHLIGHTS
** Indian stocks 1.5% higher, led by automaker Mahindra and Mahindra.
** Indonesian 10-year benchmark yields are down 7.8 basis points at 7.063%
** Philippines stocks up 1.2%, top gainers: Aboitiz Power Corp up 3.28%, AC Energy Corp up 3.02% and Ayala Corp up 2.87%