US, China data boost dollar, commodities
sydney — Investors discovered a taste for the dollar and commodities on Thursday as upbeat Chinese and US economic news whetted appetite for riskier assets globally, even as tensions over North Korea simmered in the background.
One big gainer was US gasoline which surged 6 per cent to twoyear peaks as flooding and damage from Tropical Storm Harvey shut nearly a quarter of US refinery capacity. Prices are now up more than 20 per cent in the past week.
Adding to the bullish mood, a survey showed Chinese factory growth unexpectedly accelerated in August, confounding forecasts for a slight slowdown. The official PMI firmed to 51.7, from 51.4 in July.
That gave a fresh boost to industrial metals, with copper nearing its highest since late 2014 and on track for gains of 7 per cent for August.
European share markets looked set to open firmer, with Eurostoxx 50 futures up 0.4 per cent and Germany’s DAX ahead by 0.4 per cent.
In Asia, Japan’s Nikkei rose 0.7 per cent to its best level in two weeks, helped by a pullback in the yen. The index was still down 1.4 per cent on the month, however.
MSCI’s broadest index of AsiaPacific shares outside Japan edged down 0.1 per cent, leaving it a modest 0.3 per cent firmer for the month so far.
Wall Street had got a boost on Wednesday when data showed the US economy grew at an upwardly revised 3 per cent annualised pace in the second quarter, courtesy of robust consumer spending and strong business investment.
Other figures showed US private-sector employers hired 237,000 workers in August, the biggest monthly increase in five months and an upbeat omen for payrolls on Friday. The Dow rose 0.12 per cent, while the S&P 500 gained 0.46 per cent and the Nasdaq 1.05 per cent. The better economic news helped distract from rumblings in the Korean peninsula and lifted the US dollar.
President Donald Trump on Wednesday declared “talking is not the answer” to the tense standoff with North Korea over its nuclear missile development, but his defence chief swiftly asserted that diplomatic options remain.
Against a basket of major currencies, the US dollar crept ahead to 93.015 and away from a 2-1/2year low of 91.621 touched on Tuesday. The dollar also bounced to 110.57 yen and off Tuesday’s 4-1/2-month low of 108.25. The euro recoiled to $1.1873 from its top of $1.2069, weighed in part by speculation the European Central Bank might start to protest at the currency’s strength.
“The ECB meeting is coming up next week and there are rising risks of verbal intervention from Mario Draghi,” said Deutsche Bank strategist George Saravelos.
“Despite this the euro level does not appear particularly extreme and most importantly the ECB has not been driving recent appreciation anyway,” he added. “Verbal rhetoric may cause a correction but is unlikely to be enough to derail euro strength.” — Reuters