Asian equities erased earlier losses, Australia’s dollar strengthened and most industrial metals advanced after data indicated manufacturing is picking up in China, the world’s second-biggest economy.
The MSCI Asia Pacific Index edged higher along with U.S. and U.K. stock index futures as an unexpected gain in a Chinese purchasing managers index helped revive investor sentiment following oil’s plunge to about $45 a barrel. Crude recouped less than a quarter of its loss from the last session, when it tumbled the most in a month as American stockpiles figures heightened concern about a glut. The ringgit led losses among the currencies of oil-exporting nations, while the Japanese yen snapped a six-day losing streak. Australia’s dollar climbed by the most in two weeks as copper and nickel gained.
Signs that China’s economic slowdown is abating may bolster demand for riskier assets as oil prices swing and speculation builds that the Federal Reserve will raise interest rates this year. U.S. payrolls data due Friday could provide clues as to whether that policy tightening will come sooner rather than later, with a private jobs report out Wednesday having shown steady growth in the labor market.
The Chinese data was “a nice surprise for everyone because most were noticing the deceleration of the PMI trend in the past few months,” said Khiem Do, the head of multi-asset strategy at Baring Asset Management (Asia) Ltd. in Hong Kong. “What we need to watch out for right now is the possible Fed interest-rate hike in the next few weeks.”
Manufacturing gauges for the U.S., euro area and the U.K. are also due Thursday, while a speech by Fed Bank of Cleveland President Loretta Mester may touch on the outlook for monetary policy in America. In France, Finance Minister Michel Sapin is due to set out his vision for the 2017 budget.
The MSCI Asia Pacific Index was up 0.1 percent as of 7:09 a.m. London time. Japan’s Topix index added 0.4 percent as the yen trading near a one-month low gave a boost to the nation’s exporters.
Wynn Macau Ltd. and Galaxy Entertainment Group Ltd. rallied more than 4 percent in Hong Kong after Macau reported its first increase in monthly gaming revenue in more than two years. The Hang Seng Index added 0.8 percent and the Hang Seng China Enterprises Index — last month’s best-performing stock measure globally — rose 0.7 percent. China’s official manufacturing PMI rose to the highest level in almost two years.
The PMI data was positive for China’s risky assets,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. Even so, investors are ”cautious about a September rate hike and tomorrow’s payrolls report could push the Fed to follow through.”
The Philippine Stock Exchange Index slid for a seventh day after overseas investors stepped up sales of the securities. Foreigners have pulled about $250 million from the market since mid-August, including $100 million over the last three days.
Futures on the S&P 500 Index rose 0.2 percent and contracts on the U.K.’s FTSE 100 Index gained 0.4 percent. Euro Stoxx 50 Index futures were up 0.1 percent. Pernod Ricard SA, the world’s second-largest distiller, reported full-year profit that met analysts’ estimates and forecast earnings growth this fiscal year.
The Bloomberg Dollar Spot Index was little changed, after gaining on all but one of the last nine trading days. The yen strengthened 0.1 percent to 103.37 per dollar, following a six-day slide of more than 3 percent.
Fed Vice Chairman Stanley Fischer said last week a rate hike is possible and added Tuesday that the central bank would base its decision on economic data, putting added focus on the payrolls report.
The greenback’s recent strength was due to “the Fischer comments made at the end of last week, which has spurred the belief that the September meeting could be very much alive,” said Daragh Maher, New-York-based head of U.S. currency strategy at HSBC Holdings Plc. “The market took that as a validation to continue this mini-rally in the dollar.”
The ringgit sank 0.7 percent as Wednesday’s drop in crude prices dimmed prospects for Malaysia, Asia’s only major net oil exporter. The Aussie strengthened as much as 0.4 percent following the manufacturing reports for China, Australia’s biggest export market.
Crude oil rose 0.4 percent to $44.89 a barrel in New York, after tumbling 3.6 percent on Wednesday. U.S. inventories increased by 2.28 million barrels last week, kept supplies at the highest seasonal level in almost three decades, official data show. Saudi Arabia pledged not to boost output to capacity as OPEC members plan to meet this month to discuss action to stabilize prices.
Copper rose 0.5 percent in London and nickel gained 1 percent following the manufacturing data in China, the world’s biggest user of industrial metals.
“Today’s PMI data is a good surprise,” said Wei Lai, an analyst with Cofco Futures Ltd. in Shanghai. “It will initiate strong expectations for demand in the autumn and metals will be supported at least over the coming two months.”
The yield on 10-year U.S. Treasuries was little changed at 1.58 percent, after a 13 basis point jump in August that marked the biggest increase since June 2015.
Bill Gross, the billionaire manager of the Janus Global Unconstrained Bond Fund, recommends the Fed raises interest rates at the Sept. 20-21 policy meeting and again by the middle of next year. Futures are pricing in a 36 percent chance of a rate hike this month and a 47 percent chance of two quarter-percentage-point increases by the end of 2017.
U.S. employers are projected to have added 180,000 jobs in August, according to a Bloomberg survey, and Gross said a number of 150,000 or higher should be enough to provoke Fed tightening this month.
Panasonic Corp. raised 400 billion yen ($3.9 billion) in the biggest bond issuance by a non-financial company in Japan this year. The issuance included 200 billion yen of five-year notes at a yield of 0.19 percent, half the price it paid to issue debt of that tenor in March 2015.