China AI: Bernstein sees chipmakers benefiting from Nvidia scrutiny
* MSCI ex-Japan inching towards recent 2-1/2-year peak
* China's Caixin shows sustained services sector recovery
* Wall Street climbs on defensive share gains
* Dollar gives back gains
By Swati Pandey
SYDNEY, Sept 3 (Reuters) - Asian equities started strong on
Thursday as a sustained recovery in China's services sector and
the prospect of additional U.S. stimulus whetted risk appetite,
while the dollar pared gains.
MSCI's broadest index of Asia-Pacific shares outside of
Japan .MIAPJ0000PUS climbed 0.5%, clocking its third straight
session of gains to hover near a recent 2-1/2-year high.
Australia's S&P/ASX 200 .AXJO rose 0.9% and Japan's Nikkei
.N225 added 1.3%. Hong Kong's Hang Seng index .HSI was up
0.2% while China's blue-chip index .CSI300 was 0.35% higher.
E-mini futures for the S&P 500 EScv1 were barely changed.
A closely-watched survey showed China's service sector
activity grew for a fourth straight month in August, staying
above the 50-mark, while companies hired more people for the
first time since January. The services sector, which accounts for about 60% of the
economy and half of urban jobs, had been slower to return to
growth initially than large manufacturers, but the recovery has
gathered pace in recent months as COVID-19 restrictions on
public gatherings lifted.
Analysts expect the equity markets rally to extend further
as investors focus on the "easy money" dimension, though risks
were growing.
"I think we're now at a point where tactically it makes
sense to be more prudent than two or three months ago as there
are still a number of significant risks for investors to contend
with," said Scott Berg, portfolio manager of T. Rowe Price's
global growth equity strategy.
"The economic recovery remains fragile and there is still
considerable uncertainty over the growth trajectory beyond the
initial rebound phase," Berg added.
China-U.S. tensions and U.S. presidential elections were
other major risks, with a Democrat victory likely seeing a
"major switch in policy direction and a different regulatory and
tax regime."
On Wall Street overnight, the three major equity indexes
moved higher with gains led by defensive sectors such as
utilities .SPLRCU as the high-flying tech sector .SPLRCT
paused.
"The equity market rally overnight (was) characterised by a
rotation away from the tech titans that have led gains this
year. That broadening of the equity rally is in itself a signal
of confidence in a broader economic recovery," said Steve
Miller, investment strategist at GSFM.
Data on Wednesday showed U.S. private employers hired fewer
workers than expected for a second straight month in August,
suggesting that the labour market recovery was
slowing. A separate report showed factory orders rose more than
expected in July, pointing to continued improvement in the
manufacturing sector. In currencies, the dollar gave back some of the gains from
earlier this week with its index against a basket of major
currencies down 0.1% =USD .
The greenback was slightly higher on the safe haven Japanese
yen JPY= at 106.25.
The euro EUR= was off 0.02% to $1.1851.
In commodities, U.S. crude CLc1 added 15 cents to $41.66
while Brent LCOc1 gained 5 cents to $44.48 a barrel.
Spot gold was slightly higher XAU= at $1,946.8 an ounce.
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Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Rouble tumbles https://tmsnrt.rs/31Rndf5
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(Editing by Jacqueline Wong)