SYDNEY (Reuters) – Asian equities rose on Monday as the dollar neared a three-month high after the US Senate approved a $ 1.9 billion stimulus bill for a global economic boom, although it also put new pressure on placed on the treasury.
There was also upbeat news in Asia, as China’s exports rose 155% in February, compared to a year earlier when a large part of the economy shut down to fight the coronavirus.
Athanasios Vamvakidis, an analyst at BofA, argued that the powerful mix of US stimulus, faster reopening and greater consumer firepower was a clear positive factor for the dollar.
“Including the current proposed stimulus package and further upwards as a bill on the second half of the infrastructure, the total fiscal support of the US is six times greater than the EU recovery fund,” he said. “The Fed also supports the US money supply growing twice as fast as the Eurozone.”
The prospect of even faster growth helped MSCI’s broadest index of Asia-Pacific equities outside Japan by 0.5%. Japan’s Nikkei rose by 0.9%, and Chinese blue chips by 0.7%.
S&P 500 futures rose 0.3% after a sharp turnaround on Friday. EUROSTOXX 50 futures caught up with Wall Street by up 1.2% and FTSE futures up 1.3%.
Investors in stocks outdid themselves on U.S. data showing non-farm salaries rose 379,000 jobs last month.
U.S. Treasury Secretary Janet Yellen tried to counter inflation problems by noting that the real unemployment rate was closer to 10% and that there was still a lot of slack in the labor market.
Yet yields on U.S. ten-year treasury still reached a one-year high of 1,625% following the data, and it was 1.59% on Monday. Yields rose by a solid 16 basis points for the week, while German yields actually fell 4 basis points.
The European Central Bank is meeting on Thursday amid talks that it will protest against the recent rise in eurozone yields and perhaps fraudulent ways to curb further increases.
The divergent rate of return raised the dollar to the euro, which fell to a low of $ 1.1892 from three months and was last set at $ 1.1926.
Ned Rumpeltin, European head of the FX strategy at TD Securities, said the $ 1.1950 break in chart support was a bearish development targeting $ 1.1800.
“The solid U.S. employment report may be the last missing piece of the stronger USD story,” he added. “This should put the dollar in a much stronger position compared to other major currencies.”
The dollar index jumped sharply to levels not seen since the end of November and was last at 91,897, well above the recent trough of 89,677.
It also rose on the low-yield yen, reaching a nine-month high of 108.63, and last time changing from 108.40.
The rise in yields weighs gold, which offers no fixed yield, leaving it at $ 1,713 per ounce and just above a nine-month low.
Oil prices were at their highest levels in more than a year after Yemen’s Houthi forces fired on drones and missiles at the core of Saudi Arabia’s oil industry on Sunday, raising concerns about production.
The prices were already supported by a decision by OPEC and its allies not to increase supply in April. [O/R]
Brent rose $ 1.70 a barrel to $ 71.06, while U.S. crude rose $ 1.63 to $ 67.72 a barrel.
Reporting by Wayne Cole; Edited by Sam Holmes