China wins and the automotive sector pulls shares of Asia, but the feeling is fragile

SHANGHAI (Reuters) – Asian stocks advanced on Tuesday, driven by gains in China and automakers on news of mergers, but big uncertainties over trade and economic growth have dampened investor enthusiasm.

European equity markets needed to open up higher. At the beginning of the European exchanges, the Euro Stoxx 50 pan-regional futures contracts were up 0.39% at 3,365, the German DAX futures contracts by 0.39% at 12,112, the FTSE futures contracts at 0 , 5% to 7,299.5 and French CAC 40 futures contracts, up 0.41% to 5,319.

The largest MSCI index of Asian equities outside Japan rose 0.38%, while US e-mini futures S & P 500 rose 0.22% to 2,837.25 points, indicates gains when US markets will be reopened Tuesday after holidays.

Despite the gains of the day, Joanne Goh, Asian equity strategist at DBS in Singapore, said the general sentiment of the market remains uncertain in anticipation of a possible meeting between Chinese and US presidents at the G20 summit of the month next.

"There is always a lack of direction in the markets for all the different badet clbades," she said.

"You actually see Chinese bond yields rising, but that should not be the case as we expect stimulus and bond yields should begin to degrade … there is a lot of uncertainty about the markets right now. "

Chinese stocks climbed 0.61% a day after data showed that profits of Chinese industrial firms fell in April, which could provide more incentives for the government to stimulate the slowdown in the economy.

An expected increase in the weighting of Chinese A shares in the MSCI indices after the market close Tuesday also favored equities. Seoul's KOSPI gained 0.37%, while Australian stocks gained 0.45%. Japan's Nikkei stock index finished up 0.37%.

In Chinese bond markets, the 10-year government bond futures contract to be delivered in September, the most-traded contract, rebounded 0.34% on Tuesday, after fell 0.71% the day before, after the takeover of a troubled bank by China. .

"As economic indicators are mixed and the risks of trade war are persistent, there is still a loose monetary policy stance to dampen growth. We think that the rise in long-term (Chinese) returns of govvie … is probably not justified, "said a DBS badyst.

Equity market gains in Asia followed a relatively weak session in Europe on Monday, as the UK and US financial markets were closed during the holidays.

European carmakers rallied after Italian-American carmaker Fiat Chrysler confirmed that it had made a "transformative merger" proposal to its French counterpart Renault in an agreement that would create the third largest car manufacturer worldwide. Mitsubishi Motors Corp in Japan gained 5.95% and Nissan Motor Co, 2.31%.

Geely Automobile Holdings Ltd, a Hong Kong listed company, jumped 5.47%. The provisional results of the European elections also supported the markets after the pro-trade union parties maintained their grip on power in the European Parliament elections. The pan-European STOXX 600 added 0.22%.

"Although the Eurosceptic and anti-establishment parties have not won as many seats as expected, their influence has increased considerably. This could have implications for the political color of the EU's key positions, "said Rodrigo Catril, chief currency strategist at National Australia Bank.

"The composition of the Parliament will probably have implications for the priority agenda of the future EU reform, particularly with regard to immigration, tax expenditure and the tax union", he added, pointing out that a drop in bond yields reflected a persistent risk aversion.

German 10-year Bund yields fell to -0.147% on Monday, its lowest level since September 2016.

On Tuesday, US yields were also down. Treasury bonds at 10-year benchmark yielded 2.3097%. The two-year yield was 2.1724%.

Trade concerns remain at the top of the list of investors' concerns. US President Donald Trump said Monday that Washington is not ready to reach an agreement with Beijing, but he expects one in the future, while urging Japanese Prime Minister Shinzo Abe to balance his trade imbalance with the states. -United.

The dollar was stable against the yen at 109.50 and lost 0.13% against the euro, the common currency buying $ 1.112.

The dollar index, which tracks the greenback versus a basket of six major rivals, was up 0.17% to 97,782.

In commodity markets, oil prices rose after Monday's rise of more than 1% on Middle East tensions and OPEC-driven supply cuts, as well as rising oil prices. Continued supply disruptions in Russia after a contamination problem discovered last month.

Brent crude rose 0.29% to $ 70.31 per barrel after falling below $ 70, and West Texas Intermediate crude rose 1.16% to $ 59.31 per barrel.

Spot gold was down 0.12% to $ 1,283.30 an ounce.

Bitcoin, which reached $ 8,939.18 on Monday, its highest level in more than a year, fell 0.55% to $ 8,722.61. Cryptocurrency has exceeded $ 8,000 for the first time since July 2018 on May 13.