SYDNEY (Reuters) – Asian stocks rose on Monday with some semblance of calm returning to the bond markets after last week’s wild run, while progress on the massive US stimulus package sustained optimism about the global economy and raised oil prices.
China’s official manufacturing PMI released over the weekend did not meet predictions, but Japanese figures showed the fastest growth in two years. Investors are also looking forward to upbeat news from a series of US data to be released this week, including the February payroll report.
Positive feeling was that news deliveries of Johnson & Johnson’s newly approved COVID-19 vaccine are due to start on Tuesday.
The broader MSCI index for Asia Pacific stocks outside Japan rose 1%, after falling 3.7% last Friday.
Japanese Nikkei rose 2.1%, while Chinese blue chips rose 0.8%.
NASDAQ futures jumped 1.2% and S&P 500 futures 0.8%. The EUROSTOXX 50 and FTSE futures were up 1.0%.
US 10-year banknote yields remained at 1.40%, up from last week’s peak of 1.61%. They rose 11 basis points last week to rise 50 basis points in the year so far.
“The movement of the title on Friday still seems like a pause to breathe, rather than a catalyst for a move towards calmer waters,” said Rodrigo Catril, senior strategist at NAB.
“Market participants remain nervous about the prospect of higher inflation, as economies seek to reopen with the help of vaccine launches, high levels of economy, along with solid fiscal and monetary support.”
BofA analysts noted that the bearish bond market was now one of the most severe ever recorded, with the 10-year annualized US government bond price return falling 29% since last August, with Australia falling 19%, the United Kingdom 16% and Canada 10%.
The defeat was largely due to expectations of faster US growth when the House approved President Joe Biden’s $ 1.9 trillion coronavirus aid package, sending it to the Senate.
American BofA economist Michelle Meyer has raised her economic growth forecast to 6.5% this year and 5% next year, due to the likelihood of a bigger stimulus package, better virus news and encouraging data.
Virus cases in the U.S. have also dropped 72% since the peak of Jan. 12 and hospitalizations are close behind, added the BofA.
Higher U.S. yields, combined with the general shift to security, helped the dollar index rebound to 90.787, from a seven-week low of 89.677.
On Monday, the euro remained stable at $ 1.2083, compared to last week’s peak of $ 1.2242, while the dollar remained close to the six-month top against the yen at 106.60 .
The “riskiest” currencies and those exposed to commodities jumped a little after suffering a defeat at the end of last week, with the Australian and Canadian dollars up and the emerging market currencies from Brazil to Turkey looking more stable.
Unprofitable gold was still suffering losses after hitting an eight-month low on Friday, on its way to its worst month since November 2016. The last price was $ 1,750 an ounce, just above a valley around of $ 1,716.
Oil prices widened their gains ahead of an OPEC meeting this week, where supply could be increased. Brent gained 4.8% last week and WTI 3.8%, while both were about 20% higher than in February as a whole.
Brent rose $ 1.11 to $ 65.53, while U.S. oil rose $ 1.04 to $ 62.54 a barrel.
Edited by Shri Navaratnam and Lincoln Feast.