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Asia markets get a boost from US relief rally

Monday 02:50 BST

Overview

Asian stock markets climbed in the wake of a relief rally on Wall Street on Friday triggered by easing worries about Donald Trump’s presidency.

Hot topic

Global financial markets endured a patch of turbulence in the middle of last week as political turmoil in Washington cast doubt over the prospects for Mr Trump’s pro-growth policies, such as tax cuts and infrastructure spending.

On Friday, investors put those worries on the back burner and pushed the S&P 500 0.7 per cent higher, just two days after the benchmark suffered its worst one-day fall in eight months.

Investors are likely to remain focused on the US this week. Along with Mr Trump’s arrival in Saudi Arabia over the weekend — part of a broader trip seeking to boost ties with Arab countries — traders will be tracking the minutes from the Federal Reserve’s May meeting, which will be released on Wednesday, and a second reading on March quarter US GDP, to be revealed on Friday.

What to watch

Oil prices rallied some 5.5 per cent last week, their best showing since early December, after Russia and Saudi Arabia said they favoured extending their production cuts beyond the initial deadline of March next year. That came ahead of this week’s Opec meeting in Vienna on Thursday, when the cartel will consider that extension.

Brent crude, the international benchmark, was up 0.7 per cent at $53.96 a barrel on Monday while West Texas Intermediate gained 0.7 per cent to $50.68.

Equities

Japan’s Topix was up 0.4 per cent. Takata was the benchmark’s best performer, with shares up 16.8 per cent as the troubled airbag maker continued to rally after reaching a $553m settlement with carmakers relating to flawed airbags.

Hong Kong’s Hang Seng gained 0.7 per cent. Cathay Pacific was up 2.8 per cent, among the market’s top performers, after the territory’s flag carrier announced it would make 600 head office staff redundant to deal with rising competition from mainland Chinese rivals and fewer premium class passengers.

China’s Shanghai Composite gained 0.1 per cent, while Australia’s S&P/ASX 200 added 0.8 per cent with solid gains for commodity stocks.

Forex

Major currencies were mostly weaker against the US dollar.

The dollar index, a measure of the US currency against a basket of global peers, was up 0.1 per cent at 97.277 in Asia having fallen to a five-and-a-half-month low on Friday as James Bullard of the St Louis Federal Reserve said the central bank’s projected path for lifting interest rates might be “overly aggressive”.

The Japanese yen was down by one-quarter of one percentage point at ¥111.55 per dollar, weakening after trade data showed exports and imports grew in April but at a slower pace than economists had forecast.

Among major currencies, the UK pound was down 0.3 per cent at $1.2995. Sterling on Friday closed above $1.30 for the first time since late September.

Commodities

Gold was 0.2 per cent lower at $1,253.53 an ounce as the US dollar advanced, while iron ore was 4.3 per cent higher on China’s Dalian Commodity Exchange to its highest level in a little over a fortnight.

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