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    Asian Session – Markets ignore weak data as oil surge boosts risk sentiment

    Asian equities followed European and US shares higher on Monday as risk appetite made a return at the start of the week. US stocks closed 2% higher on Friday, helping Tokyo’s Nikkei 225 index post a 7.2% rally. A weaker yen also helped Japanese stocks. The US dollar moved away from the 15-month low of 110.97 yen it touched last week to climb to 113.85 yen in late Asian session.

    Investors chose to ignore weaker-than-expected GDP data for the fourth quarter. Japan’s economy shrank by 0.4% quarter-on-quarter in the final three months of 2015, slightly below estimates of a 0.3% contraction. Final industrial production figures for December were also disappointing as they were revised lower.

    There was more gloomy data out of China today from figures showing that exports slumped by 11.2% year-on-year in January. Expectations were for a drop of 1.9%. Imports also fared badly, declining by an annual rate of 18.8%, sharply below estimates of a 0.8% drop. Chinese shares gave up earlier heavy losses to end the day around 0.6% lower after trading resumed from the week-long Lunar New Year celebrations.

    Meanwhile, the People’s Bank of China took advantage of the weaker dollar to set a firmer midpoint for the yuan. The midpoint was fixed at a one-month high of 6.5118 per dollar on Monday.

    Oil prices surged by over 10% on Friday on reports that OPEC members are moving closer to agreeing to output cuts. WTI crude oil futures eased by around 0.5% on Monday to $29.30 a barrel in late Asian session.

    Higher commodity prices and improved risk sentiment lifted the Australian dollar, which was up 0.6% at 0.7158 versus the US dollar.

    Gold pulled back from last week’s highs when it surged to a one-year high. It was down 2% today at around $1213 an ounce.

    In European currencies, the euro also came off last week’s highs of above 1.13 dollars to ease to 1.1214 dollars in today’s Asian trading. The pound was struggling to maintain the 1.45 level against the dollar, trading just below it in late session.

    The rest of the day is expected to be relatively quiet with no major data releases on the agenda.

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