TOKYO / NEW YORK (Reuters) – Asian stocks rebounded from a two-month low on Wednesday after bond yields fell after a well-received auction and Chinese stocks found a balance after recent sharp declines due to concerns about tightening policies.
The stock index of MSCI, ex-Japan Asia-Pacific, rose 0.4%, a day after reaching a two-month low. Mainland China’s A shares CSI300 index rose 0.7% at the start of trading.
The recovery came after Chinese stocks fell to their lowest levels since mid-December of the previous day, with the prospect of tighter policy and a slowdown in the economic recovery.
Japan’s Nikkei has changed little, while e-mini futures for the S&P 500 have fallen 0.25%, erasing previous gains.
“The markets are giving full attention to the bonds. Since profits are not growing so fast now, the high stock prices we have now will become unsustainable if bond yields increase further and undermine its valuation, ”said Hiroshi Watanabe, senior economist at Sony Financial Holdings.
Yield on 10-year benchmark notes fell to 1.539%, peaking at 1.626% on Friday, after Tuesday’s $ 58 billion auction of 3-year US notes was well received.
However, many market investors remained nervous, with the next tests of the investor’s appetite for government debt later this week in the form of 10- and 30-year auctions.
“Although the bond market has stabilized somewhat, the pressures will remain,” said Naokazu Koshimizu, senior rate strategist at Nomura Securities.
“He set the price for the future normalization of the Fed’s monetary policy, making the Fed’s policy eventually neutral. But it has not yet defined the price of the chance of its policy becoming more rigid ”.
Some investors see real risk from an overheated American economy and higher inflation based on planned spending by the Biden government, including a $ 1.9 trillion stimulus and an even greater infrastructure initiative.
On Wall Street, each of the major averages closed higher, led by a nearly 4% gain at Nasdaq, giving the high-tech index its best day since November 4.
The index has been highly susceptible to bullish rates, and Monday’s decline has left it more than 10% below the close of February 12, confirming what is widely considered a correction.
“Today, the 10-year term has fallen a little and that takes the pressure off of evaluations, so the technology is performing well. The market is about to be comfortable with this level of rates, ”said Kristina Hooper, chief global market strategist at Invesco in New York.
The faster implementation of COVID-19 vaccines in some countries and the planned US stimulus package have helped to sustain a brighter global economic outlook, said the Organization for Economic Cooperation and Development, by raising its growth forecast to 2021.
In the foreign exchange markets, the dollar index fell from an increase of 92.506 in 3-1 / 2 months, to 92.138.
The euro strengthened at $ 1.1881, on Tuesday’s 3 1/2 month low of $ 1.18355, while the yen changed hands at 108.76 per dollar, above the nine-month low of 109.235 set Last day.
The Chinese offshore yuan has strengthened to 6.5235 per dollar, since Tuesday’s low of 6.5625.
Oil prices retreated, easing concerns about a disruption to supplies in Saudi Arabia.
American oil futures contracts fell 0.3% to $ 63.72 a barrel from an almost 2 1/2 year high of $ 67.98 played on Monday.
Brent crude futures closed at $ 67.52 a barrel, down 72 cents or 1.06%.
Graph: Global assets: here
Graph: Global currencies vs. dollar: here
Chart: Emerging markets: here
Chart: MSCI All Country World Index market capitalization: here
Reporting by Hideyuki Sano in Tokyo and Matt Scuffham in New York; Editing by Sam Holmes and Richard Pullin