Kushalin blog

Asia stocks hit 1-month high

SYDNEY (Reuters) – Asian stocks touched one-month highs on Monday and European bourses extended last week's rally, as investors bet a recent run of better-than-expected economic data meant the world was not going to slide back into recession.

The FTSEurofirst 300 (.FTEU3) of top European shares rose 0.4 percent in early trade, as did Germany's DAX (.GDAXI), while Britain's FTSE 100 (.FTSE) and France's CAC 40 both gained 0.5 percent. (.L)

The improved market mood came after Friday's U.S. jobs data was not as bad as some had feared, allaying worries about a second recession in the world's biggest economy.

Some said a 1.3 percent jump in the S&P 500 (.SPX) on Friday also helped to brighten the mood. U.S. markets were closed for a holiday on Monday.

"There was nothing to scare the equity market into its usual September submission, and the performance of the S&P at the end of last week was encouraging," said Sean Keane, an analyst at Triple T Consulting in New Zealand.

As always, hopes for steady growth aided growth-sensitive stocks and commodities, at the expense of safe-havens such as gold and government bonds.

The MSCI Asia stock index outside Japan (.MIAPJ000PUS) jumped 1.2 percent. In a nod to hopes for firm growth prospects, the sub-index for non-essential consumer goods (.MIAPJCD00PUS) fared the best with a 1.4 percent climb.

Japan was Asia's best performer, with the Nikkei (.N225) climbing 2.1 percent and the broader Topix (.TOPX) rising 1.8 percent. Traders said buying had gained momentum after the Nikkei broke above its 25-day moving average.

Growth-sensitive exporters led the rise. Kyocera Corp (6971.T) climbed 2 percent; TDK Corp (6762.T) added 2.4 percent, and Tokyo Electron Ltd (8035.T) rose 1.9 percent.

Copper, a popular gauge for the state of industrial activity, was firm with London prices near four-month peaks.

The preference for risk -- for now -- took the shine off the U.S. dollar's (.DXY) safe-haven appeal. It flitted near a 15-year low on the yen, held back by in the interim by investor wariness of possible intervention from Tokyo.

Equally, Japanese government bond yields also hit an eight-week low, while most U.S. Treasury two- to 10-year note futures edged lower.

Gold, another traditional haven, was steady, while oil, which tends to benefit when the growth outlook improves, was an anomaly.

It fell toward $74 a barrel as peak gasoline use in the United States, a top consumer, waned with the end of the summer driving season.

STILL CAUTIOUS ON EQUITIES

But some analysts warned the market was not ready to dive into risky assets just yet.

The latest data from EPFR Global showed investors still had U.S. growth doubts firmly on their mind as they continued to pull money from stocks in favor of bonds.

Equity portfolios across regions suffered, but those in the United States were the worse hit.

Even in Asia, price performance showed the region's stock market has had a rough ride.

The MSCI Asia ex-Japan index is flat for the year, with just a 0.8 percent gain. The Shanghai Composite index (.SSEC), which resides in the world's growth engine, has struggled with a near 18 percent drop since January.

In contrast, two-year U.S. Treasury yields hit a record low last month, while Indonesian bonds have awarded investors handsome dollar-adjusted returns of over 20 percent for the year.

(Editing by Alex Richardson)