Asian stocks and commodities gain on economic recovery trading

TOKYO / NEW YORK (Reuters) – Asian stocks rose on Wednesday, following modest gains on Wall Street, as expectations that a vaccine will eventually win the coronavirus battle fueled hopes of a recovery, while expectations tight supply pushed oil prices to a year high.

The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.61%, while Japan’s Nikkei 225 rose 1.12%.

Chinese stocks rose 0.07% while South Korea’s KOSPI rose 1.05%. The Australian S & P / ASX 200 canceled its losses and added 0.18%.

US equity futures edged up 0.18%.

T-bills continued their rally, pulling benchmark 10-year yields away from their highest for nearly a year and causing the yield curve to flatten slightly.

Euro Stoxx 50 futures fell 0.03%, German DAX futures rose 0.03% and UK FTSE futures rose 0.18% indicating a moderate start to European trading .

Investors are betting the new Biden administration would step up U.S. distribution of coronavirus vaccines and spend heavily on more stimulus, which will contribute to a global economic recovery and increased demand for commodities, analysts say.

Hugh Young, head of the Asia-Pacific region at Aberdeen Standard Investments, said he expected investor interest in Asia seen in the second half of 2020 to continue this year.

“The eternal question is overvaluation. The Asian markets have done extremely well which is kind of frustrating but the quality is definitely there in Asia, the momentum is in Asia so it looks like a stable year and a positive year for Asia ”, Young told a panel at the Upcoming Reuters Conference.

On Wall Street, stocks fluctuated almost unchanged for the session, not far from records. The Dow Jones rose 0.19%, the S&P 500 by 0.04% and the Nasdaq Composite by 0.28%.

U.S. West Texas Intermediate (WTI) rose 1.13% to $ 53.81 a barrel, reaching its highest level since February after a larger than expected drop in U.S. crude inventories. Brent rose 1.27% to $ 57.30. [API/S]

Oil prices were also buoyant after Saudi Arabia announced plans to cut production by an additional one million barrels per day in February and March.

Some investors were monitoring developments in Washington after at least three Republicans said they would join Democrats in a vote scheduled for Wednesday to impeach President Donald Trump following the recent unrest on the U.S. Capitol.

Seven days to the end of his term, Trump faces indictment of inciting insurgency in a speech to his supporters last week before hundreds stormed Capitol Hill, killing five people. Trump says his speech was appropriate.

An impeachment trial could take place even after Trump leaves on Jan.20, but analysts say they don’t expect further political turmoil in Washington to affect markets.

“The markets since the election have been quite strong as the uncertainty factor has been removed,” said Peter Essele, head of portfolio management at Commonwealth Financial Network in Boston.

Benchmark 10-year US government debt yields fell to 1.1240% on Wednesday, from a nearly one-year high of 1.1870% reached in the previous session after a well-received auction of new 10-year tickets.

The yield curve, which had reached the steepest slope since May 2017 amid expectations of a strong fiscal stimulus under a new Democratic administration, narrowed slightly to 97.5 basis points.

The dollar fed its losses on Wednesday as falling US yields stifled its recent rebound.

Against the yen, the greenback fell 0.12% to 103.65. The dollar also fell to $ 1.3683 against the British pound.

Safe haven spot gold added 0.2% to $ 1,860.13 an ounce.