Asia settles global stocks for prolonged bull run on economic optimism



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TOKYO (Reuters) – Asian stocks rose on Tuesday, putting global equities on track to extend their uptrend for a 12th consecutive session, optimism about the global economic recovery and low interest rate expectations pushing forward investments in riskier assets.

FILE PHOTO: Photographers take photos near a large screen showing stock prices on the Tokyo Stock Exchange (TSE) after the market opens in Tokyo, Japan, October 2, 2020. REUTERS / Kim Kyung-Hoon

Oil prices soared to a 13-month high as a deep freeze due to a severe snowstorm in the United States not only boosted demand for electricity, but also threatened oil production in Texas.

The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.45% while Japan’s Nikkei rose 0.4% to a 30-year high.

In Hong Kong, the Hang Seng index jumped 1.79% to a 32-month high in its first trading session since Thursday after the Lunar New Year holiday.

Mainland China’s markets will remain closed for the holidays until Thursday, while Wall Street was also closed on Monday.

Ord Minnett adviser John Milroy said that while stock markets were positive, investors were wary of future inflation risk due to stimulus programs by the central bank and the government in place around the world.

“There is a clear sentiment with rates remaining low for some time to come and investor appetite for stocks remaining strong, we will likely see the markets hold for quite some time,” Milroy told Reuters.

“The idea that inflation could rise much faster and sooner than the Fed currently thinks. Then if they raise rates to combat that, which happens to the stock markets and of course the bond markets. “

The bullish outlook on the economy pushed bond yields higher, with 10-year US Treasuries gaining 5 basis points to 1.245% at the start of Asian trade, its highest since late March.

Investors are looking to the minutes of the US Federal Reserve’s January meeting, due for release on Wednesday, to confirm its commitment to maintain its accommodative policy for the near future. This in turn should keep an eye on bond yields.

But some analysts believe investors should keep a cautious eye on bond yields.

“If US bond yields continue to rise, it could start to destabilize stocks,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.

Futures on S & P500 rose 0.65% to an all-time high and MSCI’s World All Country Index (ACWI), which has risen daily so far this month, has slightly increased.

The success of the deployment of COVID-19 vaccines in many countries gives hope for a new resumption of economic activities hampered by a range of anti-virus brakes.

US President Joe Biden is continuing his plan to inject an additional $ 1.9 trillion in stimulus into the economy, to further boost market sentiment.

Oil prices hit their highest level in about 13 months as a winter storm in the United States fueled their recovery in hopes of a recovery in demand.

US crude futures rose 1.1% to $ 60.11 a barrel.

Prices have rallied in recent weeks due to tight supplies, largely due to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and associated producers in the OPEC + producer group.

Rising oil prices have supported commodity-linked currencies such as the Canadian dollar, while safe-haven currencies including the US dollar have taken a back seat.

The British pound remained firm at $ 1.3910, remaining at its highest level since April 2018.

The offshore Chinese Yuan hit a 2-1 / 2 year high at 6.4010 to the dollar overnight and last stood at 6.4030.

MSCI’s Emerging Markets Currency Index also hit a record high.

The yen weakened to 105.36 per dollar, approaching its four-month low of 105.765 set on February 5, while the euro was up 0.1% to $ 1.2142.

In Asia, Bitcoin was trading at $ 48,088.28, up from its record high of $ 49,715 reached on Sunday.

Additional reporting by Tomo Uetake in Sydney; Edited by Shri Navaratnam

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