Asian stocks climb after China data as Pound drops

Stocks in Shanghai led Asian equities higher after Chinese manufacturing data exceeded estimates. The British pound dropped amid election concerns.

Chinese shares rallied after a two-day holiday, while stocks in Japan pared declines as the yen weakened. The British pound dropped for the first time this week as a poll showed Theresa May’s Conservative Party may miss a majority. Oil extended losses and iron ore futures slid to the lowest since early November. The yield on 10-year Treasuries edged higher.

China’s official factory gauge held up, adding to signs the world’s second-largest economy has maintained some of its first- quarter momentum. Data from Japan showed industrial output rebounded in April as overseas demand continued to support the nation’s economic recovery.

While equity benchmarks across the world have posted repeated records this year, potential headwinds to global growth remain. Treasury yields slid Tuesday after Federal Reserve Governor Lael Brainard said soft inflation could cause her to reassess the path forward for monetary policy should it linger. Fed policy makers lifted rates in March and have penciled in two more 2017 rate increases, and investors expect the first of those to come in June.

Elections in the U.K., Germany and Italy are looming as Brexit negotiations begin. The Times of London published a YouGov poll showing that the ruling Conservative may lose 20 seats and their majority in parliament. Meanwhile, U.S. President Donald Trump is ratcheting up a dispute with Germany
and battling to implement spending and tax-cut plans. Fed Bank of St. Louis President James Bullard said on Tuesday the Trump administration will need to deliver on the policy expectations that have driven the stock market higher.

Source: Bloomberg Pro Terminal

Jr Trader Alexander Kumanov