SHANGHAI (Reuters) – Asian equities rose on Friday after U.S. President Joe Biden sanctioned a $ 1.9 trillion stimulus project, and after a dovish meeting of the European Central Bank caused a fall in prices. bond yields and reduced global concerns about rising inflation.
But European stocks, which had risen at the ECB meeting on Thursday, looked set to retreat from a year-high peak a day later. Euro Stoxx 50 futures in the pan-region fell 0.03% and German DAX and FTSE futures fell about 0.2% in initial trades.
Biden signed the stimulus legislation before a televised speech in which he promised aggressive action to speed up vaccinations and bring the country closer to normal by 4 July.
The signing of the American Rescue Plan gave new impetus to market sentiment after the European Central Bank said it was ready to accelerate the printing of money to contain borrowing costs, using its 1.85 Pandemic Emergency Purchase Program. trillion euros (PEPP) more generously in the coming months, to prevent any unjustified increase in debt financing costs.
That and a better-than-expected US government bond auction could support a rebound in technology stocks and a rotation between value stocks and growth in the coming weeks, said Cliff Zhao, chief strategist at China Construction Bank International in Hong Kong.
“But in the second quarter, the market will still (be) very volatile and, especially when we look at the US dollar, it is much stronger than expectations at the end of last year. Therefore, I think the strong dollar may weigh on some liquidity conditions in emerging markets, ”he said.
The broader MSCI index for Asia Pacific stocks outside Japan gained 0.53%, supported by technology gains.
Seoul’s KOSPI amounted to 1.39%, Taiwan’s shares rose 0.27% and Australia’s ASX 200 gained 0.79%.
Japan’s Nikkei rose 1.58%, and China’s top-tier CSI300 index rose 0.05%, as the decline in high-tech and consumer companies limited earnings.
U.S. Treasury yields were higher on Friday, with the 10-year yield at 1.5512%, after dropping to 1.475% overnight, its first foray below 1.5% in a week.
The German 10-year yield was -0.331%, after reaching a three-week low of -0.367%.
“There may be some disappointment (the ECB) has not expanded its bond buying program, but this is largely offset by initiatives to speed up purchases,” said Michael McCarthy, chief market strategist at CMC Markets.
On Wall Street, easing inflation concerns has helped to sustain stocks. The Dow Jones Industrial Average rose 0.58% and the S&P 500 gained 1.04%, both for record highs. Nasdaq Composite added 2.52%.
The sentiment was also boosted by weekly unemployment benefit claims, which pointed to a recovery in the US labor market, as vaccine launches helped lead to economic reopens.
Analysts expect inflation to rise as the launch of vaccines leads to a reopening, but concerns remain that Biden’s stimulus package may overheat the economy.
The dollar gained 0.22% against the yen, to 108.73, and the euro fell 0.18% on the day, to $ 1.1963. The dollar index, which tracks the dollar against a basket of six major rivals, rose 0.14% to 91.568.
Oil prices retreated from sharp gains with the dollar steadying, with US oil falling 0.41% to $ 65.75 a barrel. Brent crude lost 0.27% to $ 69.44 a barrel.
Spot gold prices fell 0.22% to $ 1,717.70 an ounce.
Reporting by Andrew Galbraith in Shanghai and Matt Scuffham in New York; Stephen Coates edition