© Reuters. Chinese and American flags flutter in Shanghai
By Hideyuki Sano
TOKYO (Reuters) – Gold hit an all-time high on Monday when consulate closures in China and the United States shook investors and increased the attractiveness of safe haven assets, although sentiment was mixed with technical gains that some Asian stocks supported.
MSCI's ex-Japan-Asia-Pacific index rose 1.3%, while Taiwan's TSMC, Asia's third largest company by market cap, rose nearly 10%.
The chipmaker's profits have boosted other tech stocks in the region and came after rival Intel (NASDAQ 🙂 signaled that delays in the new 7-nanometer chip technology could give it up on its own components.
The Chinese stock also calmed sentiment after falling sharply late last week. The CSI300 index rose 0.5%.
S&P500 futures recently rose 0.4% in troubled trading, while they fell 0.5%, resumed trading after a long weekend, and caught up in the decline in global stocks late last week.
Global stocks lost steam last week after Washington ordered the Chinese consulate to close in Houston, prompting Beijing to respond in kind by closing the US consulate in Chengdu.
US Secretary of State Mike Pompeo pursued a new goal for China last week, saying that Washington and its allies must take "more creative and assertive ways" to urge the Chinese Communist Party to change course.
"US President (Donald) Trump used to say that China's President Xi Jinping is a great leader. But now Pompeo's wording is becoming so aggressive that markets are worried about another escalation," said Norihiro Fujito, chief investment strategist at Mitsubishi Securities.
Gold rose 1.0% to a record high of $ 1,920.9 an ounce, peaking in September 2011 as tensions between China and the United States increased the attraction of safe haven assets, particularly those that did not were bound to a specific country.
The yellow metal is also supported by the aggressive monetary easing introduced by many central banks around the world since the pandemic that plunged the global economy into recession.
Some investors fear that such unprecedented money pressure could ultimately lead to inflation.
Hopes of a rapid economic recovery in the US are waning as coronavirus infections showed little sign of slowing.
That means the economy could surrender without new government support, with some earlier steps like improved unemployment benefits ending this month.
Investors hope that the US Congress will reach an agreement before its summer break, but there are a few sticking points, including the level of incentives and improved unemployment benefits.
Treasury Secretary Steve Mnuchin said the package would include expanded unemployment benefits with 70% "wage replacement".
Democrats who control the House of Representatives want the benefits of $ 600 a week to be expanded, and expect a much greater incentive compared to Republicans' $ 1 trillion plan.
Investors are looking for corporate earnings from around the world to get an indication of the pace of recovery in the global economy.
"It appears that rising coronavirus cases are slowing recovery in many countries," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui (NYSE 🙂 DS Asset Management.
Concern over the US economic outlook weighed on the dollar and reversed its reverse correlation with economic well-being in recent months.
It fell 0.3% to its lowest level in almost two years.
The euro rose 0.3% to $ 1.1693, hitting a 22-month high of $ 1.16590 as sentiment regarding the single currency improved after European leaders in an important move Step towards stronger fiscal cooperation had reached an agreement on a restructuring fund.
The dollar fell 0.5% against the yen to 105.605 yen, a four-month low, while the British pound reached a 4 1/2 month high of $ 1.2832.
Oil prices fell due to concerns about deteriorating China-US relations.
Futures fell 0.46% to $ 43.14 a barrel, while futures fell 0.44% to $ 41.11.