Asian Shares, Oil Advance On Strong China Factory Data

Asian shares were higher Wednesday after reports on key measures of China manufacturing showed a strong recovery after anti-virus controls were lifted late last year. Hong Kong's Hang Seng index jumped 3.3 per cent and Shanghai gained 0.9 per cent.

Purchasing managers' indexes issued by a business magazine, Caixin, and the official China Federation of Logistics & Purchasing showed gains in production, exports and new orders. Business activity is recovering after the ruling Communist Party ended stringent anti-virus restrictions in early December. That followed a slump in activity that dragged last year's economic growth to 3 per cent, its second-lowest level since at least the 1970s.

That was good news in Hong Kong, where the Hang Seng gained more than 700 points to 20,486.79. Hong Kong's own outlook has improved as it also has relaxed pandemic precautions. The territory's chief executive, John Lee, announced Tuesday that masks will no longer be required both outdoors and indoors, but some high-risk areas including hospitals and elderly homes can still require their use.

The Shanghai Composite added 28 points to 3,308.53. South Korean markets were closed for a national holiday. Japan's benchmark Nikkei 225 picked up 0.3 per cent to 27,523.17. Australia's S&P/ASX 200 edged up 0.1 per cent to 7,263.10. Wall Street closed out a frigid February with more losses on Tuesday. The S&P 500 lost 0.3 per cent, locking in a loss of 2.6 per cent for the month and closing at 3,970.15. The Dow fell 0.7 per cent to 32,656.70 while the Nasdaq edged 0.1 per cent lower to 11,455.54. Both also sank over the month.

Investors are keeping an eye on the last of the earnings reports for this season. Several big-name retailers are still on the schedule for this week. “The consumer and inflation are in focus over the next few days. After last week's drubbing among retail stocks, the worst since June last year, some upbeat earnings results from Target should buoy the group,” said Brian Overby, senior market strategist at Ally, while warning that more volatility may be in store later this week.

After a strong start to the year driven by hopes inflation is abating, Wall Street shifted into reverse in February. A stream of data showed inflation and the overall economy are remaining more resilient than expected. That's forced investors to raise their forecasts for how high the Federal Reserve will take interest rates and how long it will keep them there.

High rates can drive down inflation, but they also raise the risk of a recession down the line because they hurt the economy. They also drag on prices for stocks and other investments.Heightened expectations for rates sent yields jumping in the bond market Tuesday. The yield on the 10-year Treasury held steady at 3.92 per cent. It helps set rates for mortgages and other loans that shape the economy's health, and still near its highest level since November. The two-year yield, which moves more on expectations for Fed action, ticked up to 4.81 per cent from 4.78 per cent. It's near its highest level since 2007.

Reports on the economy released Tuesday showed some slight cracks. One said that confidence among US consumers fell in February. Another said that manufacturing in the Chicago region weakened by more than expected. In energy trading, benchmark US crude added 48 cents to USD 77.53 in electronic trading on the New York Mercantile Exchange. Brent crude, the international pricing standard, rose USD 0.52 to USD 83.97 a barrel.

In currency trading, the US dollar inched up to USD 136.37 Japanese yen from USD 136.20 yen. The euro rose to USD 1.0596 from USD 1.0583.