Widening unrest in the Middle East and a weakening dollar lent new impetus to a rally in oil markets with Brent crude briefly hitting the $127 mark before pulling back slightly on prospects of a peace deal in Libya. But stock markets and commodity traders chose to focus instead on stronger-than-expected trade data from China and expectations that political risks in the Middle East would be contained. Asian stocks outside Japan edged up, extending hefty gains of the last three weeks, with Chinese and Australian shares leading gains, helped by investments from overseas, a trend that has picked up in recent sessions.
During the first week of April, flows into Asia-ex Japan equity funds hit a 20-week high as expectations grew that most Asian economies were able to keep inflationary pressures in check, data from fund-tracker EPFR Global showed. After a patchy start to the year, emerging markets have roared back in recent weeks as policy tightening in China showed that authorities in the world’s biggest economies are getting more sanguine about growth prospects. Three central banks in Asia are set to review monetary policy this week with Singapore likely to tighten policy further by recentering its currency band higher, which investors said would be another thumbs up for emerging market prospects. “This means more capital inflows into emerging market assets and likely continued gains in their currencies,” Credit Agricole strategists said in a daily note.
