Asian shares tick up as investors look for proof of ‘goldilocks’



People
walk past an electronic board showing stock prices outside a
brokerage at a business district in Tokyo

Thomson Reuters

By Hideyuki Sano

TOKYO (Reuters) – Asian shares ticked up in early Tuesday trade
as investors looked to a barrage of economic data around the
world to confirm recent signs the global economy is in robust
health with inflation staying well contained.

MSCI’s broadest index of Asia-Pacific shares outside Japan
<.miapj0000pus> was up 0.1 percent, while Tokyo’s Nikkei
<.n225> rose 0.4
percent.</.n225></.miapj0000pus>

On Wall Street, the Dow Jones Industrial Average <.dji>
rose 0.28 percent to end at a record high of 21,891.12 but the
Nasdaq Composite <.ixic> pulled back 0.42 percent after
recent rallies.</.ixic></.dji>

MSCI ACWI <.miwd00000pus>, an index of the world’s 47 stock
markets, logged its ninth consecutive month of gains in July on
the back of expectations of solid global economic
growth.</.miwd00000pus>

On the other hand, softening U.S. inflation in recent months
prompted investors to bet the Federal Reserve will adopt a
patient approach to further interest rate increases.

As a result, the CBOE volatility index <.vix>, which
measures implied volatility of stocks and is often seen as
investors’ fear gauge, stood near record low levels hit last
week.</.vix>

“The low level of the Vix is a testament that investors expect
‘goldilocks markets’ to continue,” said Shuji Shirota, head of
macro economic strategy group at HSBC in Tokyo.

“Under such an environment, the dollar, which is a safe-haven
asset, will continue to decline,” he added.

Indeed, besides the United States, recent data from other parts
of the world suggest a ‘goldilocks’ scenario where growth is fast
enough to create jobs but not so rapid that it would lead to
runaway inflation.

A raft of economic data is due on Tuesday, starting with Chinese
manufacturing survey due at 9:45 a.m. local time (0145 GMT).

That will be followed by preliminary flash estimates of euro zone
gross domestic product at 0900 GMT and U.S. spending and
manufacturing data, due at 1230 GMT and 1400 GMT respectively.

In the currency market, the euro traded at $1.1824, having risen
to as high as $1.1846, its best level since January 2015, with a
test of $1.20 within sight.

It has gained almost 15 percent from its January 3 low of
$1.0340, which was its weakest level since January 2003, on
rising expectations that the European Central Bank will taper its
stimulus next year.

The dollar also slipped to a 1-1/2-month low of 110.21 yen , and
last stood at 110.32 yen.

The Australian dollar held steady at $0.8000 ahead of the Reserve
Bank of Australia’s policy announcement later in the day. The RBA
is widely expected to keep interest rates on hold.

The firing of U.S. President Donald Trump’s communications
director, Anthony Scaramucci, on Monday over an obscene tirade,
just over a week after naming him to the job, also cemented the
perception of a White house in disarray, further dragging on the
dollar.

An administration official said Trump’s new chief of staff,
retired Marine Corps General John Kelly, who sources said was
seeking to impose order and discipline on a White House riven
with factions and backbiting, asked for Scaramucci’s removal.

Oil prices rose to two-month highs on Monday, on expectations of
U.S. sanctions against Venezuela’s oil sector after Sunday’s
election of a constitutional super-body in Caracas, which
Washington denounced as a “sham” vote.

Oil prices maintained gains even after the U.S. Treasury
Department late on Monday announced sanctions limited only to
Venezuelan President Nicolas Maduro.

Brent crude futures traded at $52.70 per barrel after having hit
a high of $52.92 on Monday.

(Editing by Shri Navaratnam)

Read the original article on Reuters. Copyright 2017. Follow Reuters on Twitter.

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