SYDNEY (Reuters) – Asian equities on Tuesday recovered from earlier losses, lifted by firmer futures in U.S. equities and comments from the central bank aimed at easing fears of rising bonds and inflation.
A downturn in U.S. bond yields also drove stock markets.
The Japanese Nikkei rose 1.02% on Tuesday afternoon, while MSCI’s broad index of Asia-Pacific stocks outside Japan was 0.10% higher.
Chinese blue chips added 0.03% after reaching their lowest level this year earlier.
People’s Bank of China Deputy Governor Chen Yulu told Yicai Global that China’s money supply will only grow to match GDP growth, and that the country’s central bank will not need major stimulus support in the next five years. do not see. [bit.ly/3btQ11P]
NASDAQ futures jumped 1.1% and S&P 500 futures 0.73%. However, European futures were slightly lower, with EUROSTOXX 50 futures 0.13% and FTSE futures 0.25% lower.
“I suspect this is the best tone in Asia,” Stephen Miller, market strategist at GSFM Funds Management, referred to US futures and the central banker’s remarks.
‘From time to time, soothing comments from officials – or PBOC officials, whether the Fed Reserve, the ECB or the Reserve Bank of Australia – can calm markets, but I think all of this will be short-lived as US yields continue to rise, and I think there is a significant risk to it. ‘
Miller added that a relaxation in U.S. ten-year yields from treasury bonds also helps sentiment.
US Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s aid package for coronavirus would provide enough resources to fuel a ‘very strong’ economic recovery in the US, noting that there are ‘tools’ to deal with inflation.
Despite the positive indications, investors remain in conflict over whether the stimulus will help accelerate world growth due to the COVID-19 downturn or whether the world’s largest economy will overheat and lead to runaway inflation. lead.
“The chances of us seeing more inflation in the economy are significantly increased by the monetary and fiscal policies we see worldwide,” Goldman Sachs CEO David Solomon told a news conference in Sydney via a webcast said.
“There is definitely a reasonable outcome where inflation is accelerating faster than people expect, and that will obviously have an impact on the markets and volatility.”
The technology sector and other rich companies were very susceptible to the rising rates.
Australian equities watched overnight gains on Wall Street, with the major S & P / ASX 200 index rising 1.04% on Tuesday. However, Australian technology stocks slipped for the sixth consecutive session in line with their US counterparts.
The index resulted in gains only 0.48% higher in the afternoon trading after the technical declines. Hang Seng in Hong Kong rose 1.4%, while KOSPI of South Korea fell 0.74%.
U.S. economic data pointed to a continued recovery as the Department of Commerce said wholesale stocks rose sharply in January, despite an increase in sales, suggesting that stock investment could contribute to growth again in the first quarter.
On Wall Street, the Dow advanced overnight, while the Nasdaq plunged more than 2%, a drop of more than 10% since the end of February 12 and a correction in the value of the index was confirmed.
The Dow Jones industrial average rose 0.97%, the S&P 500 lost 0.54% and the Nasdaq Composite fell 2.41%.
“If rates rise because people are optimistic about economic growth, it is still supportive of stock prices,” said Tom Hainlin, a global investment strategist at US Bank Wealth Management’s Ascent Private Wealth Group in Minneapolis.
U.S. Treasury yields have increased as investors price higher inflation and better prospects for the U.S. economy, as evidenced by the coronavirus pandemic.
In foreign exchange markets, the dollar index held a 3-1 / 2-month high against its competitors as expectations of a faster economic normalization of the pandemic in the United States favored the currency. The euro rose 0.1% to $ 1,185.
Oil prices rose on Tuesday, helped by a likely drop in crude oil inventories in the United States, the world’s largest fuel consumer.
Brent crude futures rose 56 cents, or 0.82%, to $ 68.80 a barrel. U.S. crude futures were 50 cents, or 0.75% higher at $ 65.55.
Spot gold added 0.4% to $ 1,687.66 per ounce.
Reporting by Paulina Duran in Sydney and Matt Scuffham in New York; Edited by Christian Schmollinger and Jacqueline Wong