SYDNEY (Reuters) – Asian stocks advanced to historic records on Monday, with successful launches of coronavirus vaccines worldwide, raising hopes for a rapid economic recovery amid new Washington fiscal aid, while oil prices have increased due to increased tensions in the Middle East.
Signs for Europe and the United States were also positive, with eurostoxx 50 futures up 0.5%, Germany’s DAX futures up 0.7% and London FTSE futures up 0.8%.
E-mini futures for the S&P 500 were up 0.5%, although US stock markets are closed on Monday for the Presidents Day holiday.
The broader MSCI index for Asia Pacific stocks outside Japan jumped 0.6% to 738.23, with all major indices in the green.
Japan’s Nikkei rose 1.9%, recovering its 30,000-point level for the first time in more than three decades, despite data showing that the country’s recovery from its worst post-war recession slowed in the fourth quarter.
Australia’s benchmark index increased by 0.9%.
The Chinese and Hong Kong markets are closed due to the Lunar New Year holiday.
The highlight of the week is likely to be the minutes of the January meeting of the U.S. Federal Reserve, where lawmakers decided to leave rates unchanged.
Inflation data comes from the UK, Canada and Japan, while on Friday the main economies, including the United States, will release February’s preliminary purchasing managers’ index (PMI).
While economists expect inflation to remain benign for a while, the so-called “reflective trade” has gained momentum in recent days, largely led by coronavirus vaccines and hopes for massive fiscal spending under US President Joe Biden.
Biden pushed for the first major legislative achievement of his mandate, turning to a bipartisan group of local officials for help with his $ 1.9 trillion coronavirus relief plan.
“In our opinion, as long as the increase (in inflation) is gradual, the stock markets can continue to perform well. However, undisciplined movements would certainly hurt investor sentiment, ”said Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions.
“Credit spreads have already contracted sharply, but they still have room to absorb some higher yields, making us more comfortable with credit risk than with interest rate risk,” added Dwek.
“Commodities would benefit from an inflationary cycle, but they can still continue to recover without a core of high inflation, as economies reopen and demand increases.”
Oil prices have reached their highest level since January 2020, in the hope that the US stimulus will boost the economy and demand for fuel.
Prices also rose after a Saudi-led coalition fighting in Yemen said it intercepted a drone loaded with explosives fired by the Iran-aligned Houthi group, heightening fears of new tensions in the Middle East. [O/R]
Brent crude rose $ 1.2 to $ 63.66 a barrel. US crude oil gained $ 1.4 to $ 60.88.
On Friday, the S&P 500 and Nasdaq broke closing records. The Dow finished 0.1% higher than 31,458.4 points, the S&P 500 gained 0.5% to 3,934.83 and the Nasdaq added 0.5% to 14,095.47. [.N]
The currency action was silenced.
The dollar rose slightly against the Japanese yen at 105.08, while the euro rose to $ 1.2139 and the pound rose 0.4% at $ 1.3894. Australian and New Zealand dollars, risk-sensitive, rose 0.3% each.
This left the dollar index lower at 90.296.
Bitcoin fell more than 3% to $ 46,992, down from a record $ 49,714.66. It posted gains of about 20% in a landmark week marked by the endorsement of large companies, such as Tesla by Elon Musk.
Reporting by Swati Pandey in Sydney; Editing by Kim Coghill and Jacqueline Wong