Asian shares hit month-to-month highs forward of US employment knowledge, gold rises

© Reuters. FILE PHOTO: People wearing protective face masks after a coronavirus outbreak are reflected on a screen with the Nikkei index in front of a brokerage firm in Tokyo, Japan, Feb. 28, 2020. REUTERS / Athit Perawongmetha

From Anshuman Daga

SINGAPORE (Reuters) – Asian stock markets rose Tuesday as gold flirted near five-month highs this week ahead of European and US data likely to provide clues about the health of the global economy.

The global recovery from the COVID-19 pandemic remains patchy as exports pick up, but overall economic activity is still being dampened by new measures to contain new outbreaks.

China's factory activity grew the fastest in May this year as domestic and export demand picked up, despite sharp rises in raw material prices and tension in supply chains hampering production by some companies, a company survey on Tuesday showed.

Taiwan and South Korea stock indices climbed in early trading, while Japan, Australia and Hong Kong markets fell, pushing MSCI's broadest index for Asia Pacific stocks outside of Japan up 0.3%.

The South Korean index rose 0.8% to lead the regional gains after the country's exports saw their largest surge in 32 years in May, marking another robust month in deliveries, fueled by stronger global consumer demand. (L2N2NJ009)

The MSCI Asia Index rose to its highest level in a month, rising to almost 7% overall this year. World stocks rose for the fourth consecutive month as ample liquidity helped risk appetite despite worries about higher inflation.

US stock futures have changed little after a Monday holiday and European stock markets ended below record highs.

While asset markets have rallied over the past month, policymakers are increasingly focusing on fighting inflation at a time when the underlying structural economy is struggling to gain traction.

"The market fixation is now on inflation, and rightly so because of so many quantitative easing and supply chain disruptions," said Hou Wey Fook, chief investment officer of DBS Bank.

The main event of the week will be US payrolls on Friday, with average projections of 650,000, but the outcome is uncertain after the unexpectedly meager surge of 266,000 in April.

Although US inflation data was above estimates last week, another big failure on the job front would put pressure on the Fed to postpone plans to end stimulus measures, analysts say.

The dollar remained near multi-month lows versus major competitors as traders pondered the prospect of the Federal Reserve's monetary policy normalizing anytime ahead of the job report. (U.S. DOLLAR/)

Next, the Reserve Bank of Australia is widely expected to remain on hold on Tuesday's monetary policy review and maintain a dovish bias.

Global inflation worries have supported gold, with the price of the yellow metal rising 8% this month to comfortably above $ 1,900. On Tuesday, gold was trading near a five-month high reached last week. (GOL /)

Oil prices rose in the run-up to an OPEC + meeting and on optimism that fuel demand will rise in the coming months with the start of the summer driving season in the United States, the world's largest oil consumer. (OR)

August futures rose 0.8% to $ 69.89 a barrel while rising 1.57% to $ 67.3.

There was little movement in cryptocurrencies, with Bitcoin remaining at around $ 37,000.

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