HONG KONG: Asian shares advanced to three-month highs on Monday as progress on re-opening economies helped offset jitters over riots in US cities and unease over Washington’s power struggle with Beijing.
After a cautious start Asian markets were led higher by China on signs parts of the domestic economy were picking up. Hong Kong managed to rally 3.3%, while Chinese blue chips put on 2.54%. The hopeful signs in China helped lift MSCI’s broadest index of Asia-Pacific shares outside Japan 2.45% to its highest since early March. Tokyo’s Nikkei added 0.84% to also reach a three-month peak.
The turmoil was a fresh setback for the economy which was only just emerging from a downturn akin to the Great Depression. Following poor data on spending and trade out on Friday, the Atlanta Federal Reserve estimated economic output could drop a staggering 51% annualised in the second quarter. Bond investors suspect economies will need massive amounts of central bank support long after they reopen and that is keeping yields super low even as governments borrow much more.
In afternoon trade, the dollar was 0.3% softer on a basket of peers at 97.923 having touched an 11-week low of 97.944 on Friday. It was also down on the yen at 107.50.