HONG KONG (Reuters) – Asian equities rose on Tuesday, setting the stage for world equities to expand their bull for a twelfth consecutive session as investors use coronavirus vaccines to keep global economic recovery on track.
Oil prices rose to a 13-month high due to a severe snowstorm in the United States, which not only increased power demand but also threatened oil production in Texas.
Asia’s rising stocks pave the way for renewed optimism in world markets.
S & P500 futures have risen 0.5% and MSCI’s world index (ACWI), which has been rising every day so far this month, has risen slightly.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.62%, while Japan’s Nikkei rose 1.4% to a 30-year high.
In Hong Kong, the Hang Seng Index rose 1.4% to hit a 32-month high, while the Australian S & P / ASX200 rose 0.7% for the session. Chinese markets on the mainland remain closed for the holidays until Thursday.
The positive sentiment was also extended to Bitcoin which flirted by breaking the $ 50,000 barrier.
Bitcoin traded in the Asian afternoon trade at $ 49,323.56, slightly lower than the record high of $ 49,715 on Sunday.
JPMorgan Private Bank, head of investment strategy in Asia, Alex Wolf, said the ongoing deployment of the coronavirus vaccine gives investors confidence that global growth will be protected in 2021.
“It’s a positive factor that we’re getting into the process of economic normalization,” Wolf said.
Ord Milett adviser John Milroy said the stock markets were positive but that investors were becoming wary of the future inflation threat due to stimulus programs from the central bank and the government.
“There is a clear sense for rates that will remain low for some time to come and investors’ appetite for equities will remain strong. We will probably see the market hold for some time to come,” Milroy told Reuters.
‘The pull is the idea that inflation could rise much faster and faster than the Fed currently thinks. If they then raise rates to combat it, what happens to stock markets and of course bond markets? ”
The positive view on the economy has boosted yields, while the US Treasury has gained 5 basis points to 1.24% in Asian trade for ten years, the highest since the end of March.
Investors are looking at the minutes of the US Federal Reserve’s January meeting, which will be published on Wednesday, to confirm that they are committed to maintaining its policy on the near future. It is again aimed at keeping the returns of the bonds.
But some analysts say investors need to keep a close eye on bond yields.
“If US yields continue to rise, it could make stocks uneasy,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.
Wolf said JPMorgan’s private bank predicts that ten-year US yields could reach 1.5% by the end of 2021, as investors again benefit from further economic stimulus that could help the world’s growth prospects.
An increase in yields is not a major source of concern for the rest of the world. This is the rate of increase that is most important from an Asian perspective. If prices are to be re-priced quickly, it could have a negative effect on emerging markets, ‘he said.
US President Joe Biden continues his plan to inject an extra $ 1.9 billion stimulus into the economy to boost market sentiment.
US crude futures are trading 1.1% at $ 60.11 a barrel.
Additional reporting by Tomo Uetake in Sydney; Edited by Shri Navaratnam and Richard Pullin