Asian shares conquer 10-year peak, commodities ride high on China

LONDON – 16 October 2017: World stocks and commodities rose on Monday, boosted by upbeat Chinese data, while U.S. oil futures jumped to a near six-month high as escalating tensions between the Iraqi government and Kurdish forces threatened supply.

Asian shares rallied to a decade-high after figures showed China’s producer prices beat market expectations to rise 6.9 percent in September from a year earlier.

Copper hit three-year highs. Prices of iron ore and coke, key ingredients in steel-making, jumped with Dalian iron ore futures, [DCIOcv1] rising 2.5 percent to a 2-1/2 week high while coke for January delivery [DCJcv1] gained 1.6 percent.

Oil prices also jumped, pushed up as Iraqi forces entered the oil city of Kirkuk, taking territory from Kurdish fighters.

U.S. crude CLc1 rose 1.3 percent to $52.16 a barrel, not far from $52.85 touched late last month - a level not seen since April. Brent crude LCOc1 climbed 1.4 percent to $57.94 per barrel.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained for a fifth day running to its highest level since late 2007. [.N]

Japan's Nikkei .N225 climbed for a sixth day to a level not seen since November 1996. Australian shares extended their winning streak to a fourth straight session to rise 0.6 percent, while South Korea's stock index .KS11 set a new record.

Upbeat data from China came before the Communist Party Congress on Wednesday and third-quarter economic data on Thursday.

“Ahead of China’s Congress, it is helpful that we have reassuring numbers from China,” said Victoria Clarke, economist at Investec in London

“There were concerns about weaker economic growth.”

The IMF last week upgraded its global economic growth forecast for 2017 by 0.1 percentage points to 3.6 percent, and to 3.7 percent for 2018, from its April and July outlook, driven by a pickup in trade, investment, and consumer confidence.

Forecasts for the euro zone, Japan, China, emerging market Europe and Russia were all revised upwards.

CATALAN UNCERTAINTY

Uncertainty over Catalonia failed to put a significant dent in European stocks, although Spain lagged the broader index.

The pan-European STOXX600 added 0.2 percent, while Spain's IBEX .IBEX was down 0.7 percent.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 47 countries, was up 0.1 percent, fueled by the earlier gains in Asia and those in Europe.

Catalonia worries also pushed up the yield on Spain’s 10-year government bond 2 basis points, while the spread over German equivalents widened by a similar amount. ES10YT=TWEB DE10YT=TWEB

Catalan leader Carles Puigdemont failed on Monday to clarify whether he had declared independence from Spain last week, paving the way for the central government to take control of the wealthy region.

“Further gains in Asia and the relentless march higher in US equities have provided the impetus for European equity markets to push forward – despite Carles Puigdemont’s failure to provide a Yes or No response to whether Catalonia has declared independence,” said Rebecca O‘Keeffe, head of investment at Interactive Investor.

In Austria, conservative Sebastian Kurz is on track to become the next leader after Sunday’s election. He is seen as likely to seek a coalition with the resurgent far right because his party is far short of a majority.

The developments threaten to disrupt a move by German Chancellor Angela Merkel and French President Emmanuel Macron to draw up a roadmap to deeper European Union integration.

The euro took a knock for the third straight day on the uncertainty, falling 0.3 percent to $1.1787 EUR=EBS.

The dollar index, which measures the greenback against a basket of currencies, was 0.2 percent higher at 93.244 .DXY.