US data buoys Asian stocks
August 30, 2016, 2:46 am

Tuesday’s gains break a three-week snap of sluggish trading in Asian markets [Xinhua]

A report from the US Department of Commerce late Monday showing that consumer spending had grown for the fourth consecutive month lifted shares in Shanghai where the Composite Index rose 0.03 per cent at press time, but still shy of its August 15th monthly high.

The Hang Seng Index in Hong Kong rose 0.53 per cent in morning trade to 22,943.34.

South Korea’s Kospi also opened up 0.75 per cent to 2,047.

India’s benchmark Sensex in Bombay rose 0.43 per cent to 27,902 at Monday’s close.

In Japan, however, the Nikkei appeared steady with no change since Monday’s close which saw it rise slightly on a weaker yen.

Tuesday morning’s rally in Asian markets reverses a three-week snap of sluggish trade in Asian markets which were last week, for example, in a holding pattern as they awaited Federal Reserve chief Janet Yellen’s assessment of the US economy and whether she would raise interest rates in September.

Yellen’s major obstacle is that there continues to be weak productivity in the US economy coupled with lower-than-expected business investments. Inflation remains lower than the Fed would like and GDP growth in the second quarter was revised to just 1.1 per cent.

Offsetting these disappointing trends is data showing that the labor market was strengthening – the economy added 255,000 jobs in July, beating forecasts and registering at the highest level so far in 2016.

The report on consumer spending – which comprises two-thirds of all economic activity in the US, then, appears to point the Fed in the direction of an interest rate hike, but unlikely in September.

The Commerce Department said that July consumer spending grew by 0.3 per cent following a 0.5 per cent strengthening the month prior.

US stocks closed noticeably higher on Monday following the report, with the S&P 500 coming close to registering yet another record high.

The BRICS Post with inputs from Agencies