Asian shares rallied to a three-month high and the euro touched a one-month high against the dollar on Monday, as a stronger-than-expected U.S. jobs data and emerging optimism for European action on the debt crisis bolstered risk appetite.
But caution is likely to remain until concrete measures are taken, which may be weeks away, and investors in the meantime will be looking to data out of China starting Thursday – from trade to bank loans and investment — to give the global economic outlook a further lift.
China’s central bank on Sunday pledged to intensify monetary policy fine-tuning and improve credit policy to bolster the world’s second largest economy. With the euro zone debt crisis crippling global economic activity, Southeast Asia’s largest economy, Indonesia, will likely report its second quarter gross domestic product grew 6.1 percent on Monday, indicating its once-sizzling economy is starting to cool and show gaps in its resilience against a global slowdown.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6 percent to its highest in three months, with Hong Kong shares rallying 2 percent to be among the region’s top performers. Japan’s Nikkei stock average jumped 1.7 percent.
“Time has come to shift funds to risk assets, as markets have very limited room for further downside from here,” said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
“Investors may be questioning why they rushed to sell when the ECB and the Fed both have been saying they will take action when necessary. They never said they won’t do anything.”
