© Reuters. Men with umbrellas walking near an electric sign with the Nikkei index at a broker in Tokyo
By Anshuman Daga
SINGAPORE (Reuters) – Asian equities jumped from two-week lows on Tuesday as rising commodity prices boosted market expectations of an improved growth outlook, a day after U.S. Treasury yields and inflation prospects hit U.S. tech stocks.
Europe’s Eurostoxx 50 futures and FDXc1 futures both rose 0.2%, while London’s FFIc1 rose 0.3%. E-mini futures contracts for advanced 0.5%.
MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.4% to 726.6 after falling to 719.8, the lowest level in two weeks. The benchmark has declined from last week’s record high, but has risen by about 9% so far this year.
Fueled by the rise in commodities, the Australian rose nearly 0.9%. The Straits Times index of Singapore rose 0.6% and Taiwan 0.2%. Hong Kong rose 1%, while technology-laden South Korean Kospi lost 0.3%.
Japanese markets are closed for a public holiday.
“We are in unprecedented times, but the likelihood is that low interest rates will continue long after the world economy has shaken off the pandemic,” said Keith Wade, chief strategist at Schroders (LON 🙂 said in a note.
“For financial markets, such a prospect would intensify the search for returns and undoubtedly create volatility and bubbles as investors chase returns in the ‘zero environment’,” Wade added.
On Wall Street, high-growth stocks such as Apple (NASDAQ :), Microsoft (NASDAQ 🙂 and Tesla (NASDAQ 🙂 weighed in, shaking off 2.5% on Monday.
Commodity prices strengthened again on Tuesday. Oil prices have risen due to a tight world supply outlook after US production was hit by cold weather, and an impending meeting of top crude producers is expected to keep production largely in check.
Analysts said markets’ strongest commodity prices indicate that the rise implies strong economic activity.
rose 1.1% to $ 66.4, holding the one-year high. also rose to a one-week high of $ 1,812.6 per ounce as inflation concerns strengthened the bully’s appeal as a hedge.
The strength in commodities kept the Australian dollar stable at $ 0.79 against the US dollar, almost a three-year high.
Bond yields rose sharply this month as the outlook for more US fiscal stimulus bolstered hopes for a faster global economic recovery. However, it also stimulates inflation concerns, which are encouraging investors to sell growth stocks that have risen in recent months.
“Real US interest rates are now in a positive area, raising concerns about the impact on stock markets,” Cesar Perez Ruiz, chief investment officer of Pictet Wealth Management, said in a report.
It was stable at 90.026, with the euro 0.1% higher at $ 1.2166. The Japanese yen rose against the greenback to 105.09 per dollar.
Cash boxes were not traded in Asia with Tokyo closed for holidays, but futures contracts were slightly strengthened and an implied ten-year treasury yield of 1.34%.
Markets focus on Jerome Powell, chairman of the Federal Reserve, who will give his half-yearly testimony on Tuesday. Analysts are likely to say that Powell wants to reiterate a commitment to keep policies as easy as needed to increase inflation.
“In addition to the ongoing question of what the Fed may require to consider, the key investor interest is at what point the Fed may respond to the level or volatility of interest rates following the recent increases,” foreign exchange strategist at Citi said in a note. said.