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Asia: Equities advance, shrugging off tensions

[SYDNEY] Asian stocks rose for a second day despite escalating geopolitical risks, with Japan leading gains as the world's third-largest economy reopens.

Treasuries were flat in early trading after the three-day US weekend, while the US dollar was little changed. Shares in Tokyo, Sydney and Seoul rose more than 1 per cent.

Hong Kong opened firmer, showing signs of stabilising after weekend unrest. Shanghai had more modest gains.

Crude oil advanced to US$34 a barrel in New York.

Tensions between Washington and Beijing remain in focus with China condemning the US for adding 33 Chinese entities to a trade blacklist, but without announcing any retaliatory steps. Meanwhile, China sought to reassure Hong Kong that its judiciary would remain independent under a new national security law.

Cutting against the tensions are mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency on Monday, while a rise in a gauge of German business expectations provided another glimmer of hope for equity bulls.

On the stimulus front, European Central Bank key policy maker Francois Villeroy de Galhau told a Paris conference that there is room to innovate and act "rapidly and powerfully", signalling it could boost its emergency bond-buying programme.

Singapore's Deputy Prime Minister Heng Swee Keat is expected to announce details of a fourth stimulus package.

Recovery dynamics and potential drug developments are among "the key reasons to be positive", said Chris Iggo, chief investment officer of core investments at AXA Investment Managers. "That does not mean we should ignore the risk of second waves, prolonged weak growth and geopolitical issues."

SOME KEY EVENTS COMING UP

Earnings continue with companies including Nissan Motor, British Land, Royal Bank of Canada and HP Inc.

Singapore's parliament on Tuesday is expected to announce another stimulus package.

Thursday brings the US jobless claims reading for the week ended May 23.

Federal Reserve chairman Jerome Powell participates in a virtual discussion on Friday.

STOCKS

Japan's Topix Index rose 1.4 per cent as of 10.30am in Tokyo.

Futures on the S&P 500 were up 1.3 per cent from Friday.

Australia's S&P/ASX 200 Index gained 1.3 per cent.

Kospi Index rose 1.3 per cent.

Hong Kong's Hang Seng Index rose 1.1 per cent.

Shanghai Composite Index rose 0.4 per cent.

CURRENCIES

The Bloomberg Dollar Spot Index was little changed.

The yen dipped 0.1 per cent to 107.86 per US dollar.

The offshore yuan was little changed at 7.1423 per US dollar.

The euro was little changed at US$1.0912.

BONDS

US 10-year Treasury yields were little changed at 0.66 per cent.

Australia's 10-year bond yields were little changed at 0.86 per cent.

COMMODITIES

West Texas Intermediate crude added 2.5 per cent to US$34.07 a barrel.

Gold was little changed at US$1,732.75 an ounce.

BLOOMBERG

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