Asian equities rise at the end of October, on their way to the worst month since 2011


TOKYO / SHANGHAI (Reuters) – Asian equities pulled off 20-month lows on Wednesday as China pledged to shore up its markets. However, investor confidence was fragile as stock markets blew billions of dollars in a gloomy October.

FILE PHOTO: Visitors look at a Stock Market Stock Exchange at the Tokyo Stock Exchange in Tokyo, Japan, October 11, 2018. REUTERS / Issei Kato

Graphic: MSCI World and Asia indices – tmsnrt.rs/2P1xKze

A confluence of factors ranging from the tensions between Sino and the US to worries about global economic growth, higher US interest rates and corporate earnings has fueled financial market volatility in recent weeks.

However, European equities were expected to outperform Asia on the last day of the month, while US S & P mini futures rose 0.3%.

Spreadbetters saw the London FTSE 100 rise 0.68 percent to 7,084, the Frankfurt DAX 0.87 percent to 11,386 points, and the CAC 40 of Paris 0.82 percent at the opening.

The broadest MSCI index for Asia Pacific equities outside Japan rose 1 percent, bolstering overnight gains on Wall Street. However, it was well on track to fall 11 percent this month, which would be the worst monthly performance since September 2011.

The index fell to its lowest level since February 2017 on Monday as corporate profit worries weighed heavily on US equities.

The MSCI AC World index, which includes some major emerging economies alongside developed markets, slipped 8.6 percent this month, losing around $ 4 trillion. The smaller MSCI World Index fell 8.43 percent and lost $ 4.5 trillion in October.

Wall Street's main indexes rose more than one percent on Tuesday, helped by strong gains in chip and shipping stocks as investors took advantage of lower prices following the recent sharp pullback on equities. [.N]

Hang Seng in Hong Kong rose 1 percent on Wednesday, and the Shanghai Composite Index jumped 1.2 percent as data on factory activity was weaker than expected, confirming the assessment that Beijing will introduce further supportive measures to the economy.

Australian equities gained 0.4 percent and South Korea's KOSPI rose 0.7 percent.

In Japan, the Nikkei gained 2.2 percent, which was confirmed by the Bank of Japan signal that it will maintain its ultra-lightweight policy for some time.[.T]

"The recent decline in equities has been so strong that it has invited buyers such as the Japanese stock market," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

Ichikawa said that trade between the US and China is likely to remain a worrying factor even after the US elections on 6 November.

US President Donald Trump said in an interview with Fox News late Monday that he believes there may be an agreement with China on trade. But he also said he has new billions worth of dollars available if a deal is not possible.

In currencies, the dollar index stood at 97.034 against a basket of six major currencies, after 97.063 after a high of 16 months, after data from Tuesday showed US consumer confidence rose to an 18-year high in October, which suggests continued economic growth in the near future.

The dollar traded close to three weekly highs against the yen after the BOJ decided to set interest rates on fire. At 0637 GMT, a greenback cost 113.21 yen.

The euro was unchanged at $ 1.1344, having lost 0.25% the previous day. A drop below $ 1.1336 would bring the single currency to its lowest level since mid-August.

China's yuan in onshore trading was 6.9673 per dollar, but remained close to a decade on Tuesday.

The Chinese currency was on course in October with a loss of 1.4 percent, the seventh monthly loss in a row – the longest such loss recorded.[CNY/]

The yuan has been weighed down by fears of slowing Chinese economic growth and a possible sharp escalation in the US and Chinese trade wars. Wednesday's data showed that China's manufacturing industry had been growing at its weakest pace in October for more than two years in October, and export orders were on the decline.

The Australian dollar fell 0.2 percent to $ 0.7009, weighed by weak domestic inflation data. Growth data from Chinese factory growth also weighed on the Aussie.

The Indian rupee fell even 0.6 percent after the Governor of the Central Bank could consider resigning amid growing tensions with the government.

The oil price rebounded slightly after plunging to a multi-month low the previous day, which is diminishing on signs of rising supply and fears that global demand for fuel will fall victim to the US-China trade war. [O/R]

US crude oil futures rose 0.38 percent to $ 66.43 per barrel, down from $ 65.33 on Tuesday, the lowest since mid-August.

Brent crude rose 0.62 percent to $ 76.38 after a decline of 1.8 percent on Tuesday.

Additional reporting by Swati Pandey in Sydney; Arrangement of Shri Navaratnam and Kim Coghill

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