Higher commodities support Asia resource stocks

Asia shares dip
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By Kevin Plumberg
HONG KONG (Reuters) - Commodity-related shares led Asian stocks higher on Wednesday, snapping a two-day decline, after metals and oil prices rallied on a decline in the U.S. dollar and as hopes grew for stronger Chinese industrial demand.
Investors are scouring fresh Chinese data this week for signs that the economy remains on the road to recovery. Expectations that the economy is picking up have helped buoy prices of key metals like copper, which hit its highest level since Oct 15 on Tuesday.
"Most of the moves are coming from commodities, not surprising considering how strong commodities were last night. Copper in particular was extremely strong. That's reflected in the market today," said James Foulsham, head of trading at CMC Markets in Australia.
Dealers also chipped away at the U.S. dollar as futures markets reflected second thoughts about a possible Federal Reserve rate hike this year, while the Australian dollar rose further above US$0.80 after an index of consumer confidence in the resource-rich country showed the biggest gain in 22 years.
In Asian equity markets, Australia's benchmark S&P/ASX 200 index .AXJO was one of the biggest gainers, rising 1.7 percent.
Shares of mining giants Rio Tinto (RIO.AX) and BHP Billiton (BHP.AX) outperformed the broader market, rising 3.2 percent and 3.4 percent, respectively.
Japan's Nikkei share average .N225 climbed 1 percent, with Mitsubishi Corp (8058.T), Japan's largest trading house, up 4.2 percent, on the back of higher commodity prices. Shipping firms also rose on hopes for a recovery in the global economy.
The Nikkei largely shrugged off data showed Japan's core machinery orders unexpectedly fell 5.4 percent in April, suggesting any recovery in capital expenditure is still fragile.
The MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS rose 1.6 percent, with the materials sector by far the largest riser, while the defensive utilities sector underperformed the market.
Shanghai copper rose more than 2 percent to 41,950 yuan a ton, tracking London copper's rally in the previous session. But the RSI, or relative strength indices, for copper and aluminum in both London and Shanghai are now above 70, a sign that the markets are overbought.
It is still unclear if signs of improvement in some markets point to the return of sustained consumer demand or if companies are merely replenishing depleted inventories. A solid rebound in end-user demand is needed to ensure a global recovery.
DOLLAR PAUSES
The ICE Futures U.S. dollar index .DXY, a measure of its value against a basket of six other major currencies, was largely unchanged on the day, after falling about 1.2 percent on Tuesday.
The dollar has been propelled by speculation the Fed may have to raise interest rates sooner than previously thought if economic numbers such as last Friday's U.S. payrolls figure keep surprising to the upside.
However, the December three-month eurodollar contract, a way for traders to bet on short-term interest rates, has clawed back about half the losses endured since last Friday, putting pressure again on the dollar. Continued...
Source: Reuters