TOKYO, May 8 — Asian shares rose to their highest in nearly two years today, as strong Chinese trade data added to positive sentiment already bolstered by record highs overnight for US and German stocks.
Yesterday, the Standard & Poor’s 500 Index touched an intraday record high and the Dow Jones industrial average closed above 15,000 for the first time, while Germany’s benchmark DAX equity index ended at a record high.
Investors are seeing better returns from equities than bonds, which have been hit by interest rate cuts by major central banks, with the Reserve Bank of Australia becoming the latest to do so yesterday.
“The RBA is just playing catch-up,” said Evan Lucas, a market strategist at IG in Melbourne, noting central banks’ moves around the globe. “The major benefactors of this cut will be risk stocks as income-plays flopped on the move.”
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.8 per cent to its highest since August 2011, pulled up by a 0.7 per cent gain in Australian shares and a 0.8 per cent rise in Hong Kong shares.
After last Friday’s upbeat US monthly nonfarm payrolls and this week’s German industrial orders showing unexpected strength, China followed suit earlier today with better-than-expected trade numbers for April, further cementing the positive mood.
China reported that its exports rose 14.7 per cent in April from a year ago while imports grew 16.8 per cent, leaving the country with a trade surplus of US$18.16 billion (RM54 billion) for the month.
The trader numbers may ease some of the concerns about weakness in the recovery of the world’s second-largest economy and top consumer of many commodities following a run of below-par data in recent weeks.
However, doubts remained over the strength of real demand in China and the accuracy of the figures, with some analysts suspecting exporters may have overstated their business to sneak funds into the country and avoid capital restrictions.
The Australian dollar reached its intraday high of US$1.0193 after the data from China, its biggest export market.
Japanese stocks again outperformed their regional peers, scaling a fresh five-year high. The Nikkei stock average climbed 1.4 per cent to its highest since June 2008, adding to yesterday’s 3.6 per cent rise.
“The steady inflows from foreign investors are ongoing. It is providing good support for the market,” a trader at a foreign brokerage in Tokyo said.
Tough times for gold
Global equities, particularly in the United States, have remained robust despite the recent signs of a patchy recovery in world growth, mainly helped by major central banks pursuing accommodative monetary policy.
A successful bond sale in Portugal also supported the upbeat mood as it indicated the country is on track to exit its bailout, bolstering views that the euro zone crisis is abating even as debt problems in the region remain far from resolved.
Gold has taken a beating in this environment. Spot gold was up 0.3 per cent at US$1,456.96 an ounce, after losing more than 1 per cent yesterday as holdings on gold-backed exchange-traded funds fell to their weakest since early 2009.
“The continuing outflow of gold ETFs is symbolic. Money is returning to ‘normal’ financial assets such as stocks, suggesting the super-cycle of a commodities boom is over and tough times lie ahead, especially for metals,” said Bob Takai, general manager of Sumitomo Corp’s energy division in Tokyo.
“Commodities prices will be determined more by normal supply and demand balances than speculative money flows,” he said, adding that a downtrend in commodities prices will hurt resources-reliant economies.
The euro was up 0.1 per cent to US$1.3090 against the dollar and up 0.2 per cent against the yen at 129.67.
The dollar firmed 0.1 per cent to ¥99.07.
US crude futures were steady around US$95.62 a barrel and Brent inched down 0.1 per cent at US$104.26. — Reuters