REUTERS – Asian shares rose Tuesday on positive U.S. manufacturing data and gains in technology stocks helped overcome worries about the coronavirus and world economy.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 percent while shares in China rose 0.1 percent. Australia stocks gained 2 percent for their biggest intraday gain since July 21. Tokyo shares rose more than 1 percent.
Oil futures gave up overnight gains and fell in Asia as a result of worries about an increase in the supply of crude. U.S. stock futures were 0.02 percent higher in Asian trade.
An industry gauge released overnight indicated U.S. manufacturing activity expanded in July at its fastest in more than a year. However, some investors remain cautious as a result of worries about a resurgence of the coronavirus and a diplomatic tussle over China technology companies operating in the U.S.
"It has been an upbeat U.S. trading session and Asia will absorb the leads accordingly," Chris Weston, head of research at Pepperstone, said.
On Monday the Dow Jones industrial average rose 0.89 percent, the S&P 500 gained 0.72 percent and the Nasdaq composite rose 1.47 percent to set a record closing high thanks to manufacturing data. That data caused the U.S. Treasury curve to steepen - an indication of improved investor sentiment.
U.S. stocks received another lift from Microsoft. Its shares rose 5.6 percent after it formally declared interest in buying the U.S. operations of TikTok, a popular video-sharing app owned by China technology company ByteDance. U.S. President Donald Trump has threatened to ban TikTok unless its U.S. operations are sold off from ByteDance. The U.S. is preparing to take action against other software companies from China that could share user data - setting the stage for further conflict.
The dollar held steady against its comparative currencies. Traders were waiting for progress in negotiations for additional economic stimulus. U.S. House Speaker Nancy Pelosi will meet with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows on Tuesday to continue talks. Hopes were raised for a breakthrough soon. The "only good thing we can say on the political impasse in Washington is that negotiations remain ongoing," analysts at National Australia Bank said.
Chicago Federal Reserve Bank President Charles Evans on Monday called for more U.S. government spending to support the economy. He said "demand trouble is brewing" as existing relief policies expire.
Spot gold was down 0.09 percent Tuesday but still near a record of $1,984.66 set Monday as a result of virus fears.
U.S. crude dipped 0.61 percent to $40.76 a barrel while Brent crude fell 0.59 percent to $43.89 per barrel thanks to worries about extra supply entering the market. Russia has started to increase oil and gas output, a source told Reuters. Other oil producing countries are expected to increase output this month after the Organization of the Petroleum Exporting Countries and its allies agreed to ease production curbs.
