Asia: Stocks climb as Xi-Trump meeting approaches

[SYDNEY] Stocks in Asia rose at the start of a busy week that includes a meeting between Xi Jinping and Donald Trump and culminates in the monthly US jobs report.

Stocks from South Korea to Indonesia gained, after the best quarter for the region's equities in five years. Japanese shares fluctuated after a report showed an improving outlook among the countries' largest firms. The US dollar weakened after New York Federal Reserve President William Dudley said there's no rush to raise interest rates. The euro rose. Markets in China and Taiwan are closed for holidays. Oil edged lower after last week's biggest gain of the year.

As the second quarter gets going, political developments threaten to cloud the improving global economic outlook. The first major data release showed confidence among Japan's large manufacturers improved for a second consecutive quarter in the first three months of the year.

The US dollar was struggling for upward momentum even before Mr Dudley's dovish comments Friday, and despite last month's Fed rate hike, on concern Mr Trump may struggle to steer his promised tax cuts through Congress. A Bloomberg gauge of the currency recently hit a four-month low.

"Investors will look to the economic data and minutes out from both the FOMC and ECB in the week ahead for the next clues," said Michala Marcussen, Paris-based global head of economics at Societe Generale SA.

"When it comes to risk sentiment, however, markets are likely to take their cue from the two-day meeting between President Xi and President Trump starting on Thursday in Florida with the US-China trade deficit at the top of the agenda."

The RBA is projected to keep rates steady Tuesday. Australian trade data due before may give guidance to the debate between the need to restrain currency strength and damping runaway east-coast property prices. India's central bank will probably also hold rates. Inflation numbers are due from Thailand, South Korea and the Philippines.

Fed speakers include Mr Dudley and governor Daniel Tarullo. Minutes from the March meeting should put their comments into perspective. Minutes are also due from the European Central Bank's latest gathering.

China's President Xi Jinping will meet US President Donald Trump.

US non-farm payrolls are due Friday.

Stocks

The MSCI Asia Pacific Index gained 0.2 per cent, after soaring 8.8 per cent in the first quarter, the best performance since 2012.

The Topix index gave up some of the morning's 0.5 per cent gain and was up 0.1 per cent at 1:23pm in Tokyo. Hong Kong's Hang Seng was up 0.3 per cent.

South Korea's Kospi and Singapore's Straits Times Index were also up 0.3 per cent, and Jakarta's Composite climbed 0.7 per cent. Australia's S&P/ASX 200 Index fell 0.3 per cent.

Futures on the S&P 500 were little changed after losing 0.2 per cent on Friday. The Stoxx Europe 600 Index rose 0.2 per cent.

Currencies

The yen was up less than 0.1 per cent at 111.35 per US dollar as most major Asian currencies gained. The Korean won led the charge, rising 0.5 per cent, building on its more than 7 per cent advance in the first quarter.

The euro rose 0.2 per cent to US$1.0677. The Australian dollar fell 0.3 per cent. The Bloomberg Dollar index was down less than 0.1 per cent.

Bonds

The yield on 10-year Treasuries rose less than one basis point to 2.40, after dropping three basis points Friday.

Commodities

WTI crude was down 0.2 per cent at US$50.51 a barrel, after the biggest weekly gain of the year. Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to Opec's Secretary-General Mohammad Barkindo.

Gold was flat at US$1,248.20 per ounce. The metal has alternated between gains and losses for the past six days.

BLOOMBERG