Equities rose across Asia on Monday following another record day on Wall Street, with traders also cheered by data suggesting China’s economic malaise is showing signs of easing.
The positive start to the week was not felt in the euro, however, as a budget standoff in France fuelled concerns about the fragile government of the eurozone’s second-biggest economy.
Traders began the month on the front foot after a rollercoaster ride since Donald Trump’s re-election and warning that he will hit China, Canada and Mexico with hefty tariffs.
They took their cue from New York, where the Dow and S&P 500 both ended at record highs in a holiday-shortened session.
Hong Kong and Shanghai were among the best performers after data showed Chinese manufacturing activity expanded at a faster clip than expected in November.
The purchasing managers index figures provided some hope that the world’s number-two economy was turning a corner after a long-running slowdown, with analysts pointing to a raft of support measures unveiled at the end of September.
“The last two months of PMI data offered early signs of green shoots following the recent policy pivot and subsequent stimulus programmes,” said Anna Zhou and Helen Qiao at Bank of America Global Research.
“We expect policymakers to step up easing measures next year, including the continuation of the equipment upgrade and consumer goods subsidy programmes, which should help support the manufacturing sector amid deteriorating external demand.”
Some commentators also pointed to optimism that Trump could take a more pragmatic approach to tariffs, with Mexican President Claudia Sheinbaum saying after a phone call with the Republican: “There will not be a potential tariff war.”
Still, investors were keeping a wary eye on developments as the US president-elect puts his cabinet together.
“Advanced Northeast Asian economies consistently run merchandise trade surpluses with the US,” said analysts at Moody’s Analytics.
“While falling short of China’s $280 billion surplus with the US, or the EU’s $207 billion surplus, Japan, South Korea and Taiwan each run surpluses large enough to notice, putting them in the firing line of new tariffs.”
There were also gains on Monday in Sydney, Seoul, Singapore, Taipei, Manila and Jakarta.
Japan was flat as the yen held recent gains around 150 per dollar, as bets on a Bank of Japan interest rate hike increase after last week’s forecast-topping Tokyo inflation report.
