SYDNEY (Reuters) – Asian stocks rose to a record high on Monday as successful effects of coronavirus vaccines worldwide sparked hopes for a rapid economic recovery amid new fiscal aid from Washington, while oil prices rose as due to the increased tension in the Middle East.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.4% to 736.4.
The Japanese Nikkei climbed 1.1%, despite data delaying the country’s recovery from its worst post-war recession in the fourth quarter.
Australia’s benchmark index added 0.9%, while E-mini futures for the S&P 500 rose 0.3% in early Asian trading.
The markets in China and Hong Kong are closed for the New Year holidays. US stock markets will be closed on Monday for the President’s holiday.
The highlight of the week will likely be minutes of the US Federal Reserve’s meeting in January, where policymakers decided to leave rates unchanged.
Inflation data are due to the UK, Canada and Japan, while major economies, including the United States, released the Comprehensive Purchasing Managers’ Index (PMI) in February on Friday.
While economists expect inflation to remain good for some time to come, the so-called “reflection trade” has gained steam over the past few days, led mainly by coronavirus vaccines and hopes of massive fiscal spending under US President Joe Biden.
Biden is campaigning for the first major legislative achievement of his term, turning to a dual group of local officials for help with his $ 1.9 billion coronavirus emergency plan.
“In our opinion, the stock markets can gradually continue to perform well as long as the rise (in inflation) continues. However, volatile movements will definitely hurt investor sentiment, ”says Esty Dwek, Head of Global Market Strategy, Natixis Investment Managers Solutions.
“Credit spreads have already increased sharply, but they still have room to absorb higher returns, making us more comfortable with credit risk than interest rate risk,” Dwek added.
“An inflationary cycle may be favored by commodities, but they may still continue to recover without high core inflation as economies reopen and demand increases.”
Oil prices have climbed to the highest level since January 2020, hoping that the US stimulus will boost the economy and demand for fuel.
The prices were also alive after a Saudi-led coalition in Yemen said it was intercepting an explosive-laden drone fired by the Iranian Houthi group, sparking fears of new tensions in the Middle East. [O/R]
Brent crude rose $ 1 to $ 63.43 a barrel. U.S. crude rose $ 1.2 to $ 60.7.
On Friday, the S&P 500 and Nasdaq closed the record. The Dow ended 0.1% higher at 31,458.4 points, the S&P 500 rose 0.5% to 3,934.83 and the Nasdaq added 0.5% to 14,095.47. [.N]
The action in currencies has been muted.
The dollar was slightly higher against the Japanese yen at 105.01, while the euro rose to $ 1.2125 and the British pound rose 0.3% to $ 1.3886. The risk-sensitive Australian and New Zealand dollars rose by 0.1%.
This left the dollar index stable at 90,426.
Bitcoin was barely changed in early Asian trading at $ 47,994, below a record high of $ 49,714.66. It made a profit of about 20% in a milestone week marked by the approval of big companies like Tesla by Elon Musk.
Reporting by Swati Pandey in Sydney; Edited by Kim Coghill and Jacqueline Wong