China’s Stocks Defy Brexit Turmoil as Coal, Steel Shares Advance

Mainland Chinese stocks advanced the most among emerging markets in Asia, with energy and materials companies pacing gains after policy makers said they will reduce overcapacity in the coal and steel industries.

The Shanghai Composite Index added 0.7 percent. China Shenhua Energy Co. climbed to a seven-week high after the head of the National Development and Reform Commission said the nation will cut coal capacity this year by about 7.5 percent to curb pollution and eliminate so-called “zombie” companies in the struggling industry. Angang Steel Co. rose the most in nearly four months after the NDRC said it also plans to shed 45 million tons of steel capacity this year. The ChiNext index of small-company shares added 1.5 percent.

The advances in mainland equities contrasted with losses in most other Asian markets after the U.K.’s vote to leave the European Union increased anxiety among investors around the world. The markets have overreacted to the so-called Brexit and need to calm down, China’s Finance Minister Lou Jiwei said in Beijing over the weekend.

The Shanghai Composite traded at 2,874.92 as of 11:11 a.m. local time. The CSI 300 Index advanced 0.7 percent, with gauges of consumer-staples and energy companies rising at least 1.6 percent among industry groups. The MSCI Emerging Markets Index fell 0.8 percent, while the Hang Seng China Enterprises Index of mainland companies traded in Hong Kong lost 0.7 percent.

Source: Bloomberg

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Aussie to Real Defy Commodity Rout as Fed Defangs Rate Increase

Commodity currencies including the Australian dollar, South Africa’s rand and the Brazilian real are surging as traders focus on the potential for a gradual cycle of U.S. interest-rate increases and ignore a rout in raw material prices.

New Zealand’s dollar led gains on Thursday, when the greenback fell against its 16 major peers as minutes of the Federal Open Market Committee’s October meeting signaled a shallow path for any rate increases next year. The Aussie is poised for back-to-back weekly advances, with traders paying the smallest premium on options to protect against weakness in the currency in more than a year even as iron ore, Australia’s chief export, dropped to a four-month low.

The Aussie traded at 71.87 U.S. cents as of 9:18 a.m. in Tokyo from 71.94 on Thursday, poised for a 0.8 percent advance this week. New Zealand’s dollar fetched 65.59 U.S. cents after climbing 1.5 percent to 65.66 in the previous session. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, was little changed at 1,228.70 after declining 0.7 percent on Thursday, the biggest drop since Oct. 14.

Source: Bloomberg