Stocks hit new high as US and China lead recovery

SINGAPORE (Reuters) – Stocks moved closer to a record high on Tuesday, supported by strong economic data from China and the United States, while currency and bond markets paused after a month of rapid gains of the dollar and treasury bills.

Global stocks briefly hit an all-time high in Asia, as gains of 1% in the technology-intensive Taiwanese market and the stock-heavy Australian banks and miners followed the increases on Wall Street.

Profit taking lowered Japan’s Nikkei 1% and trailed the Shanghai Composite, although European futures rose ahead of the first trading session after Easter.

FTSE and EuroSTOXX 50 futures rose 0.8%. The S&P 500 closed on Monday at a record high, and futures fell 0.2% on Tuesday. [.N]

On the heels of an exceptional US employment report on Good Friday, data for March showed service activity to hit an all-time high. China’s service sector also gained momentum with the biggest sales increase in three months.

“Overall, this is good for the global economy and therefore is a rationale for switching to currency pairs that are more sensitive to cyclical cycles and for buying stocks in general,” said Kyle Rodda, analyst at market at IG brokerage in Melbourne.

“Yields haven’t moved much so technology stocks have outperformed,” he said.

The benchmark 10-year US Treasury yield fell 1.7 basis points to 1.6897%, while the US dollar mostly missed a big rebound from strong data and held steady at 1 , $ 1,810 per euro after posting its biggest drop in weeks.

Elsewhere, Credit Suisse has sought to draw a line under its exposure to the implosion of hedge fund Archegos Capital announcing that the debacle will cost it around $ 4.7 billion and two senior executives their jobs.

STEADY STATE

The stabilization of Treasury and greenback yields follows a higher load in the first quarter, with 10-year yields rising 83 basis points, the largest quarterly gain in a dozen years and a 3.6% rise in the dollar index – the largest since 2018.

“Bonds have stabilized now,” said Omkar Joshi, portfolio manager at Opal Capital Management in Sydney, after a massive and rapid sell-off. “I think the markets can continue to function from here.”

The minutes of the US Federal Reserve’s March meeting, scheduled for Wednesday, are the bond markets’ next target, although they will not resolve the latest data surprises and markets have far exceeded projections from the Fed for years of low rates.

Fed funds futures have forecast a rise next year, while Eurodollar markets pegged it in December.

“What to test is how the Fed is strengthening and reassuring about its flexible policy of targeting average inflation,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.

“The last weeks of dollar movement reflect the evolution of the markets despite what the Fed has said,” he added.

Currencies were fairly calm throughout the Asia session and held on to small gains on the dollar. The Australian dollar traded at $ 0.7647 after the central bank kept its policy parameters stable, as expected.

The Japanese yen was a fraction lower at 110.21 per dollar, while the British pound hit a two-and-a-half-week high at $ 1.3919. [FRX/]

The dollar sway helped oil prices recoup some losses suffered on Monday, fearing that a new wave of COVID-19 infections in Europe and India could reduce demand for energy. [O/R]

Brent futures rose 0.6% to $ 62.53 a barrel while US crude climbed 0.8% to $ 59.11 a barrel. Gold tacked 0.5% to $ 1,737 an ounce. [GOL/]