SYDNEY, (Reuters) – Share markets edged higher yesterday as investors wagered the U.S. economy was on the mend after a shockingly weak start to the year, yet a drop in both the dollar and Treasury yields suggested not everyone was convinced.
Asian markets also have their doubts about the Chinese economy which will be tested when the official measure of manufacturing activity (PMI) is released at 0100 GMT.
Forecasts are for the PMI to edge up to 50.5 in April, from 50.3 in March, and any miss would only add to concerns the economy was stumbling, absent the sort of significant stimulus that Beijing seems reluctant to undertake.
Caution ahead of the numbers combined with holidays across much of the region made for a slow start. Australian shares were flat, while Japan’s Nikkei added 0.5 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan
was up 0.1 percent, but almost all the markets in that index are shut on Thursday.
Sentiment was supported somewhat by Wall Street where the Dow notched up its first record high of the year. The Dow ended up 0.27 percent, while the S&P 500 gained 0.3 percent and the Nasdaq 0.27 percent.
That was a resilient performance given government data had shown the U.S. economy grew just 0.1 percent annualised in the first quarter, far below already gloomy forecasts of 1.2 percent.
Net exports, inventories and investment all dragged on growth, with household spending the only bright spot.
Still, investors have been willing to give the economy the benefit of the doubt in expectations of a rebound this quarter, and other data did offer some supporting evidence.