In This Article:
By Anshuman Daga
SINGAPORE, June 1 (Reuters) - Asian equity markets hit a one-month peak on Tuesday, buoyed by the global stock rally, while gold flirted with five-month highs ahead of European and U.S. data this week that will likely offer clues on the health of the world economy.
European stocks were set for a mixed start, with Euro Stoxx 50 futures up 0.3%, while FTSE futures gave up 0.4%.
The world's recovery from the COVID-19 pandemic remains patchy with exports reviving but broader economic activity still dampened by new measures to contain fresh outbreaks.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4%, hitting the highest in a month and taking total gains made so far this year to nearly 7%. World equities have risen for a fourth straight month as ample liquidity supported risk taking despite worries about higher inflation.
In Asia, Taiwan's and South Korea's indexes notched gains, making up for selling it Japanese, Australian and Chinese markets.
South Korea stocks rose as data showed the country's exports logged their sharpest expansion in 32 years in May. That contrasted with Japanese data that showed companies cutting spending on plant and equipment for the fourth straight quarter.
China's factory activity expanded at the fastest pace this year in May as domestic and export demand picked up, a business survey showed.
While asset markets have rallied last month, policymakers are focused on tackling inflation at a time when the underlying structural economy has been struggling to gain traction. Markets are also awaiting signals from the Federal Reserve on when it will start tapering its bond-buying programme.
"The fixation of the markets now is on inflation and rightly so because of so much of quantitative easing and supply chain disruptions," said Hou Wey Fook, chief investment officer at DBS Bank.
"It seems to be that tapering should be on the cards. But it will be mild, it'll be slow and will be very well communicated."
This week's main event is the U.S. payrolls on Friday with median forecasts at 650,000, but the outcome is uncertain following April's unexpectedly weak 266,000 gain.
Though U.S. inflation data last week was above estimates, another big miss on the jobs front would delay prospects for any wind down of stimulus, analysts say.
The dollar languished near multi-month lows versus major peers as traders looked for clues on Fed direction.
"The world economy is clearly recovering, and that is going to be bad for the U.S. dollar because it's a counter-cyclical currency," said Commonwealth Bank of Australia strategist Joseph Capurso. "The U.S. dollar has been pretty heavy in the last few weeks, and I think it keeps trending lower."