The global stock rally gathered momentum in Asia, where shares extended gains into a third day ahead of another week of key central bank meetings. Weaker-than-expected Chinese data weighed on copper futures, as gold attempted a rebound.
Banking and consumer shares drove the regional benchmark higher as Asian stocks tracked Friday’s surge in the U.S., which saw the Standard & Poor’s 500 Index back at levels last seen at the end of December. The South Korean won strengthened as the yen maintained declines, while gold clawed back some of last session’s 1.8 percent selloff. Copper lost 0.2 percent after China issued figures at the weekend that indicated momentum in factory output and retail sales is slowing. U.S. crude oil retreated.
Risk appetite got a shot in the arm Friday as investors reconsidered the European Central Bank’s unprecedented stimulus. With ECB chief Mario Draghi almost skewering his monetary easing announcement last week, the focus now shifts to the Bank of Japan and the Federal Reserve, which update on policy in the next few days. In China, central bank Governor Zhou Xiaochuan said “excessive” stimulus wouldn’t be required to achieve the nation’s growth goal of at least 6.5 percent over the next five years, even after the weak factory and retail data and a report showing the broadest measure of new credit dropped.
“Central banks are going to be dominating market sentiment,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, told Bloomberg Radio. “That could be enough for the risk rally to continue but I think it is starting to run out of steam. The Fed is going to be front and center” this week, he said.
The MSCI Asia Pacific Index climbed 0.7 percent as of 9:54 a.m. Tokyo time, set for its highest close since Jan. 5 and a three-day advance of 2 percent. Japan’s Topix index added 1.3 percent, also rising a third day, while the Kospi index in Seoul was up 0.1 percent.
Equity gains in Japan were helped by an unexpected surge in machine orders, with procurements jumping 15 percent in January from the previous month, after economists predicted an increase of 1.9 percent.
Australia’s S&P/ASX 200 Index added 0.8 percent in a second day of gains, with energy and telephone shares climbing at least 1.8 percent. New Zealand’s S&P/NZX 50 Index rose 0.9 percent.
Futures on the Standard & Poor’s 500 Index dropped 0.1 percent early Monday, after the index surged 1.6 percent on Friday to cap a fourth straight weekly advance. The S&P 500 closed at its highest level since Dec. 31 last session, as banks and energy shares led the advance.
Contracts on the Hang Seng Index in Hong Kong increased 0.5 percent on Friday, as those on the Hang Seng China Enterprises Index, which tracks mainland stocks listed in the city, rose 0.9 percent. FTSE China A50 Index futures gained 0.8 percent in most recent trading.
Futures on copper due in May slipped to $2.2365 a pound on the Comex after sliding 1.5 percent last week. China, the world’s biggest consumer of industrial metals, reported 5.4 percent growth in industrial production for February, below the 5.6 percent read projected by economists, while retail sales expanded 10.2 percent, trailing the estimated 11 percent.
Gold, regarded along with government debt and the yen as a haven investment, rallied after Friday’s slump, gaining 0.4 percent to $1,254.89 an ounce after sliding 1.8 percent last session.
In the oil market, West Texas Intermediate crude futures were down 0.4 percent to $38.35 a barrel following four straight weeks of gains. Brent was little changed Monday at $40.42, after rising 0.9 percent at the end of last week.
Iran plans to boost crude output to 4 million barrels a day before it will consider joining other suppliers in seeking ways to re-balance the global market, with Oil Minister Bijan Zanganeh saying other producers should “leave us alone” until then, according to the Iranian Students News Agency. Rigs targeting oil in the U.S. fell by 6 to 386 last week, according to Baker Hughes Inc., the least since December 2009. That’s the 12th week of declines.
The won strengthened a third session, adding 0.3 percent to 1,189.85 per dollar as neighboring Japan’s currency traded steady at 113.80 a dollar, following Friday’s 0.6 percent drop.
The euro lost as much as 0.2 percent early Monday amid a weak showing for German Chancellor Angela Merkel’s party in state elections on Sunday, before erasing the losses.
Merkel’s Christian Democratic Union failed to recapture the southwestern region of Baden-Wuerttemberg from the Greens, placed second to the Social Democratic Party in the western region of Rhineland-Palatinate. The anti-immigration Alternative for Germany party made significant gains in Saxony-Anhalt, in the formerly communist east, according to ARD TV projections.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed Monday after three days of declines. Odds of the Federal Reserve raising U.S. interest rates this year have increased to 77 percent, from 68 percent a week ago and 30 percent a month ago, according to Fed funds futures tracked by Bloomberg. The Fed reviews monetary policy on Wednesday.