Asian shares experience an uplift on Monday after a solid session on Wall Street, while the dollar moved away from recent highs though remained supported as investors bet that the U.S. Federal Reserve was on track to raise rates sooner rather than later.
Financial spreadbetter IG expected Britain’s FTSE 100 .FTSE would open 0.1 percent higher and Germany’s DAX .GDAXI 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.6 percent, after U.S. shares rallied on Friday, shrugging off growing expectations of further tightening in monetary policy.
But Japan’s Nikkei stock index .N225 ended down 0.5 percent on worrying economic data and reports that Japan’s sales tax increase would be implemented after all, quashing hopes of a delay.
Japanese Finance Minister Taro Aso told U.S. Treasury Secretary Jack Lew on Saturday that Japan will raise the sales tax as planned.
“The market was convinced hundred percent that a tax hike will be delayed,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Adding to concerns about the tax, data released before the open showed Japan’s exports tumbled 10.1 percent in April from a year earlier, in line with expectations but down for a seventh straight month, reflecting sluggish demand from China and emerging markets. Imports fell sharply, which in turn boosted the country’s trade surplus above expectations.
The Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index showed Japanese manufacturing activity contracted at the fastest pace in more than three years in May as new orders slumped.
Investors expect the Bank of Japan to muster further stimulus steps, perhaps as early as this summer.