Market Overview

Asian shares rebound, U.S.-China tensions overshadow economic optimism

Asian shares bounced back from a three-month low on Friday thanks to a late-day rally on Wall Street as optimism about the global economic recovery was overshadowed by rising tensions between the West and China. MSCI’s ex-Japan Asia index rose 0.37% after hitting a near three-month low on Thursday, while the Shanghai Composite Index gained 0.78%, snapping a three-day losing streak. On Thursday, Chinese shares fell near to a three-month low hit earlier in the month. The European Union joined Washington’s allies this week in imposing sanctions on officials in China’s Xinjiang region over allegations of human rights abuses, prompting retaliatory sanctions from Beijing.

Japan’s Nikkei rose 0.89% after Wall Street shares staged a rally, driven by cheap, cyclical stocks that have been battered by the pandemic. The Dow Jones Industrial Average rose 0.62% and the S&P 500 gained 0.52% while the Nasdaq Composite added just 0.12%. Analysts said trading was being driven more by an end-of-quarter rebalancing of investment portfolios by institutional investors rather than news flow, though they noted overnight headlines were mostly supportive for stocks.

U.S. Labor Department data showed claims for unemployment benefits dropped to a one-year low last week, a sign that the U.S. economy is on the verge of stronger growth as the public health situation improves. In his first formal news conference, U.S. President Joe Biden said that he would double his administration’s vaccination rollout plan after reaching the previous goal of 100 million shots 42 days ahead of schedule. But while improvement in the U.S. health crisis has underpinned risk appetite globally, investors are increasingly alarmed by a divergence in health conditions.

The dollar also rose to 109.17 yen, within a striking distance from last week’s nine-month high of 109.365 yen. The index of the U.S. currency stood near its highest level since mid-November, having gained 2.0% so far this month. Oil prices rebounded a tad from a 4% drop on Thursday, though they are on course for their third straight week of losses on worries about a further reduction in demand.

Asian shares rebound, U.S.-China tensions overshadow economic optimism, Reuters, Mar 26

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