Ways2Capital Reviews : Asian Stocks Rebound As Italy Woes Abate; Yen Gains

Asian stocks rebounded after US shares rallied with Treasury yields, as investors saw the market reaction to Italy’s political turmoil as overdone. The dollar held losses and oil stabilized following gains.

The MSCI Asia Pacific Index of stocks bounced after touching its lowest level since February Wednesday amid heightened fears Italy could leave the euro. Financial shares on the regional benchmark advanced, boosted by the US 10-year yields back above 2.84%.

Energy shares led gains as West Texas crude surged above $68 a barrel. The greenback was little changed after its biggest decline in nearly three weeks and the yen pushed higher.

While the slump in Italian bonds that spilled over into global risk assets has abated, the prospect of snap Italian elections -- which could effectively become a referendum on the euro -- continues to loom and the timing of any vote remains unclear. The concerns add to a growing list that includes the strength of the global economy, North Korea and simmering trade tensions.

“We are going to be filled with tremendous uncertainty over the course of the summer,” David Ader, chief macro strategist at Informa Financial Intelligence, told Bloomberg Television. “I don’t see that at this point in time we have a big directional play. I see a lot of uncertainty, which results in a lot of volatility.”

Traders will get some distraction from geopolitics and trade, with the U.S. jobs report out on Friday, the last one before the Federal Reserve meets next month when it’s expected to lift interest rates for the seventh time since the end of 2015. Morgan Stanley Chief Executive Officer James Gorman said the Fed is unlikely to be dissuaded from pursuing its path of monetary tightening as a result of recent volatility in financial markets.

Elsewhere, Italy’s 10-year yield retreated Wednesday after a successful bond auction and as politicians made a last-ditch attempt to form a government. China’s official factory gauge rose more than estimated in May while services also improved, signaling that the expansion remains robust even as debt curbs and trade tensions with the U.S. cloud the outlook.

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