SYDNEY (Reuters) – Asian stocks rebounded from previous losses on Tuesday, driven by firmer US equity futures and central bank comments aimed at calming fears about rising bond yields and inflation.
A retraction in US bond yields has also boosted equity markets.
Japan’s Nikkei rose 1.02% on Tuesday afternoon, while the broader MSCI index for Asia Pacific stocks outside Japan was 0.10% higher.
Chinese blue chips increased 0.03%, after reaching the lowest level this year.
Deputy Governor of the People’s Bank of China, Chen Yulu, told Yicai Global that China’s money supply would only increase to keep pace with GDP growth and that the country’s central bank saw no need for major stimulus support in the coming years. five years. [bit.ly/3btQ11P]
NASDAQ futures jumped 1.1% and S&P 500 futures 0.73%. European futures were slightly lower, however, with EUROSTOXX 50 futures falling 0.13% and FTSE futures 0.25% lower.
“I suspect that is what is taking the best tone in Asia,” Stephen Miller, market strategist at GSFM Funds Management, referring to US futures and comments from the central bank.
“From time to time, soft comments from employees – whether they are PBOC employees, either the Fed Reserve, the ECB or the Reserve Bank of Australia – can calm the markets, but I think all of those things would be ephemeral if bond yields for USA to continue to rise, and I think there is a significant risk of that. “
Miller added that easing 10-year US Treasury bond yields also helped sentiment.
U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s coronavirus aid package would provide sufficient resources to fuel a “very strong” economic recovery in the US, and noted that “there are tools” to deal with with inflation.
Despite the positive signs, investors remain at odds over whether the stimulus will help global growth recover more quickly from the slowdown in COVID-19 or cause the world’s largest economy to overheat and lead to rampant inflation.
“The chance of seeing more inflation in the economy is significantly increased by the actions of monetary and fiscal policy that we are seeing around the world,” said Goldman Sachs CEO David Solomon at a Sydney conference via webcast.
“There is certainly a reasonable outcome in which inflation accelerates faster than people expect, and that will obviously have an impact on markets and volatility.”
The technology sector and other high-value companies have been highly susceptible to higher rates.
Australian stocks followed overnight gains on Wall Street, with the main S & P / ASX 200 index rising to 1.04% on Tuesday. However, Australian technology stocks fell for the sixth consecutive session, in line with their US peers.
The index returned those gains to an increase of just 0.48% in the afternoon’s trading after technology declines. Hong Kong’s Hang Seng advanced 1.4%, while South Korea’s KOSPI fell 0.74%.
US economic data pointed to a continued recovery, with the Department of Commerce saying that wholesale inventories increased solidly in January, despite increased sales, suggesting that investment in inventory could again contribute to growth in the first quarter.
On Wall Street, the Dow advanced overnight, while the Nasdaq fell more than 2%, marking a drop of more than 10% since its closing high on February 12 and confirming a correction in the index value.
The Dow Jones Industrial Average rose 0.97%, the S&P 500 lost 0.54% and the Nasdaq Composite fell 2.41%.
“If rates are going up because people are becoming optimistic about what economic growth is like, this is still favorable for stock prices,” said Tom Hainlin, global investment strategist at Ascent Private Wealth Group at US Bank Wealth Management in Minneapolis .
US Treasury yields have advanced as investors look at higher inflation and more optimistic outlook for the US economy as it emerges from the coronavirus pandemic.
In the foreign exchange markets, the dollar index remained close to a 3-1 / 2-month high against its rivals, as expectations of a faster economic normalization of the pandemic in the United States put the currency at an advantage. The euro rose 0.1% to $ 1,185.
Oil prices rose on Tuesday, helped by a likely reduction in crude oil stocks in the United States, the world’s largest fuel consumer.
Brent oil futures rose 56 cents, or 0.82%, to $ 68.80 a barrel. US oil futures were 50 cents, or 0.75% higher, at $ 65.55.
Spot gold added 0.4% to $ 1,687.66 an ounce.
Reporting by Paulina Duran in Sydney and Matt Scuffham in New York; Edition by Christian Schmollinger and Jacqueline Wong