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Broadgate: Market News 5/6

5 June 2012

Asian shares, the euro and commodities rebounded on Tuesday, with stocks holding a touch above 2012 lows, as investors looked to European policymakers and the wider G7 to take decisive action to address the worsening euro zone crisis.

In a sign of heightened global alarm about strains in the 17-nation euro area, finance chiefs of the Group of Seven leading industrialized powers will hold emergency talks by phone later on Tuesday.

Investors turned less pessimistic and looked for bargains in battered assets ahead of three major events this week: the G7 phone hook-up on Tuesday, the European Central Bank’s policy decision on Wednesday and U.S. Fed Chairman Ben Bernanke’s congressional testimony on Thursday.

The MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS climbed 1.2 percent, after tumbling 2 percent during Monday’s sell-off which had been sparked by last week’s weak U.S. jobs data. The U.S. data followed bleak surveys of Chinese and European factory activity.

“Investors are pinning their hopes on the G7 and the ECB meetings and have taken on a bit of encouragement as well from signs of a German policy shift,” said Ham Sung-sik, an analyst at Daishin Securities in Seoul.

“But we still need to see some tangible results to say a bottom has been carved out in the market.”

The MSCI pan-Asian index’s materials sector. MIAPJMT00PUS led the gains, putting the resources-reliant Australian equities among the region’s best performers with a 1.1 percent rise.

Japan’s Nikkei average of major stocks also added 0.6 percent and Tokyo’s broader Topix index firmed 1 percent after the latter hit a 28-year low on Monday.

Shanghai copper bounced off its 2012 lows with a 1.5 percent jump on Tuesday, while U.S. crude up 1.1 percent to $84.91 a barrel, rebounding from its lowest in nearly eight months touched the previous session. Brent rose 0.8 percent to $99.63.

“Even though commodity prices have fallen, I don’t expect they’re going to go through the floor. Emerging countries are still growing … There’s still going to be appetite there,” said David Spry, research manager at broker F.W. Holst.

The benchmark Thomson Reuters-Jefferies CRB index .CRB, a global commodities benchmark, settled up 0.6 percent on Monday for its sharpest gain since April 27, after dropping almost 11 percent in May, the second-largest monthly decline since 2008.

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

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