Asian investors took a breather on Tuesday after the latest rally, but analysts said optimism over the improving US economy was helping overcome worries about a possible trade war and geopolitical uncertainty.
US markets provided another strong lead, with the Nasdaq chalking up a new closing high, as Friday’s better-than-expected jobs report continued to provide support despite an expected jump in Federal Reserve interest rates.
Attention this week turns to the Group of Seven summit that begins Friday in Quebec, where Donald Trump is expected to face criticism over his decision to lump tariffs on Canadian, Mexican and European steel and aluminium.
The EU and Canada have filed complaints at the World Trade Organization while China has also issued a warning to Washington not to target its exports.
However, while there are concerns about the impact a trade war would have on the global economy, Stephen Innes, head of Asia-Pacific trade at OANDA said trading floors were broadly upbeat for now.
“So far, investors remain focused on a broader subset of US economic data while concluding that US earnings and the economy are sufficiently robust to keep the equity bull market intact,” he said in a note.
“And for the time being, putting the prospects of higher US interest rates and global trade wars, which usually scare investors stiff, on the back burner.”
Tokyo ended the morning session 0.1% higher, while Hong Kong fell 0.3% and Shanghai shed 0.2 %.
Sydney and Seoul were each off 0.3%, while Taipei and Manila also slipped.
However, Singapore added 0.4% and Wellington rallied 0.9%.
On currency markets the dollar extended gains against the yen thanks to bets on US borrowing costs rising this year.
The euro was also holding up on relief that last week’s political turmoil in Italy had subsided, though there are still some concerns about what sort of policies the new, populist-led government will implement.
Oil prices edged up slightly but crude dealers remain on edge ahead of a June 22 OPEC meeting where the cartel will discuss its two-year-old output cap deal with Russia, with Saudi Arabia having indicated it could open the pumps more.
The commodity has been hammered in recent sessions by concerns of a glut, with WTI down about 10% from its recent highs and Brent around 6% off.
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