Asian stocks follow Wall Street higher ahead of Fed meeting

TOKYO (Reuters) – Asian stocks rose on Tuesday, following Wall Street’s advance to record highs, as investors predicted that the US Federal Reserve and other central banks meeting this week would maintain their accommodative policies to help stimulate global economic recovery from the pandemic.

European stocks looked set to extend the global rally, with pan-regional Euro Stoxx 50 futures up 0.2% and FTSE futures 0.5% higher in early trades. On Monday, the STOXX 600 index hit its highest level in over a year before ending flat. S&P 500 E-mini futures edged up 0.04%.

An Asia-Pacific non-Japan equity market index rose 0.69%, led by a 1.2% jump in the Australian benchmark S & P / ASX 200.

Japan’s Nikkei 225 gained 0.5% just below the watchful 30,000 mark, while the larger Topix added 0.65%.

China’s blue-chip CSI 300 index climbed 0.55% and the Hong Kong Hang Seng rose 0.46%.

“The rally in equities is tied to expectations that, as we hear from central banks this week, they will reiterate a message they have already made clear – that they don’t care about the outlook for inflation.” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“Whether this will last or not is a key question. We have seen sentiment reverse sharply on several occasions over the past two or three weeks, particularly in the bond markets. But for now, the sun is shining and the equity gains reflect that. “

On Monday, the S&P 500 and the Dow Jones Industrial Average both soared on gains in travel stocks as mass vaccinations in the United States and congressional approval of an aid bill of $ 1. $ 9 trillion fueled investor optimism.

Yields on longer-term U.S. Treasuries fell further on Tuesday, as the market anticipated government debt auctions and the two-day Fed policy meeting, which ends Wednesday.

The benchmark 10-year yield, which peaked more than a year at 1.642% last week, fell to 1.125%.

The earlier surge in yields stems from investor speculation that rising inflation expectations could prompt the Federal Open Market Committee to signal that it will start raising rates sooner than expected.

Fed policymakers should predict that the U.S. economy will grow in 2021 at the fastest rate in decades, as it recovers from a coronavirus-stricken 2020.

The Bank of England also meets this week on Thursday, while the Bank of Japan closes a two-day meeting on Friday.

On Wall Street, the Dow Jones Industrial Average rose 174.82 points, or 0.53%, to 32,953.46, the S&P 500 gained 25.6 points, or 0.65%, to 3,968.94 and the Nasdaq Composite remained unchanged at 0.00.

Airlines shares rose as companies showed concrete signs of an industry recovery, with vaccine rollouts helping to boost leisure bookings.

Prospects for a post-pandemic recovery continued to diverge between the United States and Europe.

President Joe Biden’s order to make vaccination accessible to all adults by May 1 contrasted with the rollout of stuttering in Germany, France and elsewhere, where use of the AstraZeneca vaccine has been suspended due to concerns regarding possible serious side effects.

However, Kyle Rodda, analyst at IG Markets, said the prospect of a slower economic recovery in Europe did not appear to be a major handicap for investors.

“It doesn’t appear to be a real risk,” he said. “Investors are suspicious, but not worried.”

On the currency front, the US dollar posted small gains against the night, with caution evident ahead of central bank meetings.

The greenback was largely flat at 109.19 yen, after climbing to 109.365 on Monday for the first time since June.

The euro was little changed at $ 1.1930, languishing for an eighth session below the closely watched $ 1.20 level.

Bitcoin continued its slide from a record high of $ 61,781.83 reached on Saturday, with the latest trading 2.42% lower on the day at around $ 54,304.

US West Texas Intermediate crude for April changed hands to $ 64.81 a barrel, down 58 cents. Brent futures for May stood at $ 68.31 a barrel, losing 57 cents.