© Reuters. FILE PHOTO: A man wearing a protective face mask walks past a screen with a chart showing the recent average Nikkei share outside a broker, amid coronavirus disease (COVID-19), in Tokyo
By Wayne Cole
SYDNEY (Reuters) – Asian stock markets rose higher on Monday as expectations of faster economic growth and inflation hit securities globally and commodities rose, although rising real returns also made stock valuations appear more stretched.
MSCI’s broadest Asia-Pacific equities index outside Japan rose 0.1% after declining from a record high late last week as the rise in U.S. bond yields yielded uninhibited investors.
recovered 1.0% and South Korea 0.4%, while the E-Mini futures contract was a fraction.
Bonds have been bruised by the prospect of a stronger economic recovery and even bigger loans as President Joe Biden’s $ 1.9 billion stimulus package progresses.
“The yield curves have continued to increase as COVID infection rates fall further, reopening plans are discussed and a major U.S. fiscal stimulus package is likely to emerge,” Christian Keller said. Barclays (LON 🙂 ‘head of economic research.
“This indicates in principle a better medium-term growth outlook for the US and beyond, as other core yield curves are moving in the same direction,” he added. “Meanwhile, it looks like the central banks are going to look through the inflation hike this year, keeping the front of the curves anchored.”
Federal Reserve Chairman Jerome Powell is giving his biannual testimony before Congress this week and is likely to repeat a commitment to keep policies as easy for as long as necessary to increase inflation.
European Central Bank President Christine Lagarde is also expected to speak in a speech later Monday.
The yield has already reached 1.36%, which has broken the psychological 1.30% level and brought the rise for the year so far to 41 basis points.
Analysts from BofA noted that 30-year bonds have returned -9.4% so far this year, the worst start since 2013.
“Real assets outperform financial assets in ’21, as cyclical, political, secular trends suggest higher inflation,” analysts said in a note. “The yield of commodities, backward energy in fashion, material in secular interruptions.”
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One of the stars was a key component of renewable technology, which last week soared 7.7% to a nine-year high. Even the broader LMEX base metal index climbed 5.5% this week.
Oil prices went through the ride, helped by stockpiling and icy weather, which Brent has achieved by 21% for the year so far. [O/R]
Early Monday, the futures contract rose 43 cents to $ 63.34 a barrel, while 11 cents was added to $ 59.35.
This is all a boon for commodity-linked currencies, with the Canadian, Australian and New Zealand dollars for the year so far significantly higher.
Sterling also reached a peak year of more than $ 1.4000, aided by one of the fastest explosions in the world. British Prime Minister Boris Johnson will have to figure out a way out of COVID-19 exclusions on Monday.
It is relatively volatile, and the downward pressure is shaping the country’s growing twin deficits, which are offset by higher yields. The index was last at 90,341, not far from where it started the year at 90,260.
Rising Treasury yields helped the dollar rise somewhat to 105.42 in the yen as the Bank of Japan actively curtailed yields at home.
The euro was stable at $ 1.2121, linked to support at $ 1.2021 and resistance at $ 1.2169.
One commodity that is not doing so well is gold, partly due to rising returns, and partly because investors are asking whether cryptocurrencies could be a better hedge against inflation.
The precious metal was $ 1,782 per ounce, starting the year at $ 1,896. was up 2.3% on Monday at $ 57,275, after starting the year at $ 19,700.