TOKYO (Reuters) – Asian stocks soared on Tuesday, following Wall Street’s advance to record highs, as investors anticipated that the Federal Reserve and other U.S. central banks meeting this week will maintain accommodative policies to help boost a post-pandemic global economic recovery.
European equities appeared destined to extend the global recovery, with Euro Stoxx 50 pan-region futures rising 0.2% and FTSE 0.5% higher in initial trades. On Monday, the STOXX 600 index reached its highest level in more than a year before ending stable. E-mini futures for the S&P 500 were up 0.04%.
An Asia-Pacific stock market index, excluding Japan, appreciated 0.69%, led by a 1.2% jump in Australia’s S & P / ASX 200 benchmark.
Japan’s Nikkei 225 gained 0.5%, just below the 30,000 mark, while the broader Topix added 0.65%.
China’s blue chip CSI 300 index rose 0.55% and Hong Kong’s Hang Seng rose 0.46%.
“The recovery in stocks has to do with expectations that, as we hear from central banks this week, they will reiterate a message that they have already made clear, that they are not concerned about inflation prospects,” said Michael McCarthy, chief strategist at market at CMC Markets in Sydney.
“Whether this will last or not is a key question. We have seen sentiment revert sharply several times in the past two or three weeks, especially in the bond markets. But for now, the sun is shining and the equity gains reflect that. “
On Monday, the S&P 500 and Dow Jones Industrial Average soared with gains in travel stocks, with mass vaccination in the United States and Congressional approval of a $ 1.9 trillion bill that fueled investor optimism.
The US Treasury’s long-term yields fell further on Tuesday, with the market looking at government debt auctions and the Fed’s two-day policy meeting, which will conclude on Wednesday.
The 10-year benchmark yield, which hit a 1.642% high of more than a year last week, was back at 1.125%.
The previous rise in yields resulted from investors speculating that rising inflation expectations could lead the Federal Open Market Committee to signal that it will start raising rates sooner than expected.
Fed policymakers are expected to predict that the US economy will grow in 2021 at the fastest rate in decades, while recovering from a 2020 hit by the coronavirus.
The Bank of England also meets this week on Thursday, while the Bank of Japan closes a two-day meeting on Friday.
On Wall Street, the Dow Jones Industrial Average rose 174.82 points, or 0.53%, to 32,953.46, the S&P 500 gained 25.6 points, or 0.65%, to 3,968.94 and the Nasdaq Composite remained unchanged to 0.00.
Airline stocks soared as companies pointed to concrete signs of a recovery in the sector, as the launch of vaccines helped boost leisure reserves.
The prospect of post-pandemic recovery continued to differ between the US and Europe.
President Joe Biden’s order to make vaccination available to all adults by May 1 contrasted with the implementation of stuttering in Germany, France and elsewhere, where the use of the AstraZeneca vaccine has been suspended due to concerns about possible serious side effects.
However, Kyle Rodda, an analyst at IG Markets, said the prospect of a slower economic recovery in Europe did not appear to be a major handicap for investors.
“It does not seem to be the view that this is a real risk,” he said. “Investors are cautious, but not worried.”
In currencies, the US dollar made small gains overnight, with evident caution ahead of central bank meetings.
The US dollar was virtually stable at 109.19 yen, after rising to 109.365 on Monday, for the first time since June.
The euro changed little by $ 1.1930, languishing for an eighth session below the closely observed $ 1.20 level.
Bitcoin continued its fall from a record high of $ 61,781.83 reached on Saturday, the last trading being 2.42% weaker on the day, around $ 54,304.
US West Texas Intermediate crude for April changed hands at $ 64.81 a barrel, down 58 cents. Brent oil futures for May were at $ 68.31 a barrel, losing 57 cents.
Reporting by Kevin Buckland in Tokyo and Kane Wu in Hong Kong; Editing by Cynthia Osterman, Jacqueline Wong and Simon Cameron-Moore