Business news
Stanley White
Koh Gui Qing
TOKYO / NEW YORK (Reuters) – Asian equities soared on Tuesday, with Japanese equities hitting a 30-year high, as investor risk was encouraged by a Brexit trade deal and expects a relief package US pandemic has long been expected to expand.
The broader MSCI index for Asia Pacific stocks outside Japan rose 0.45%. Australian stocks ended 0.53% higher. Japan’s Nikkei rose 2.4%, to its highest value since August 1990. China’s shares resisted the trend, falling 0.32% in profit making.
Futures for the S&P 500 added 0.4%.
Euro Stoxx 50 futures were up 0.42%, German DAX futures were up 0.53% and FTSE futures were up 1.12%, pointing to a bright start for European trading.
The dollar fueled losses against major currencies and Treasury yields increased after approval by U.S. President Donald Trump of a $ 2.3 trillion stimulus package to contain the effects of the coronavirus pandemic.
While the package has yet to pass the Senate, Trump’s approval on Sunday caused Wall Street’s stock to hit record highs on Monday amid optimism about the economic recovery.
“With Brexit … and the US stimulus deal now in the rearview mirror, there is a sense of relief that we have avoided the respective worst-case scenarios,” said Stephen Innes, chief global market strategist at Axi, a broker.
Britain struck a narrow Brexit trade deal with the EU on Thursday, just seven days before leaving one of the world’s largest trading blocs.
The firmer demand for riskier assets kept the US dollar, which is often seen as a “safe haven” asset, at a disadvantage. It fell 0.02% against a basket of major currencies.
The dollar’s short sale has been a popular trade recently and Reuters calculations based on data released by the Commodity Futures Trading Commission on Monday suggested that the trend could continue. Dollar short positions increased in the week ending December 21 to $ 26.6 billion, the highest in three months.
The dollar index against a basket of six major currencies dropped to 90.137, not far from the lowest index in more than two years.
The pound rose to $ 1.3483 after last week’s confirmation of a widely expected trade agreement between the UK and the EU.
A weak dollar boosted gold prices, which rose 0.33% to $ 1,877.56 an ounce.
Jack Ma’s Alibaba Group Holding Ltd rose 6.4%, breaking six consecutive declining sessions. Analysts said these gains may be short-lived, as Chinese regulators called for a shake-up of Ant Group, Alibaba’s mobile payment and consumer finance arm.
Analysts also cited concerns that other large Chinese technology companies may face more government scrutiny, which could restrict investment in the sector.
Oil prices rebounded after falling overnight due to concerns about increased supply and reduced demand amid new COVID-19 travel restrictions around the world.
Brent crude rose 0.45% to $ 51.09 a barrel. United States crude rose 0.48% to $ 47.85 a barrel.
More fiscal stimulus from the U.S. has also eased concerns about the threat posed by new variants of the coronavirus identified in Britain and South Africa.
The yield on 10-year reference Treasury bills rose to 0.9381%, but the two-year yield decreased to 0.1270%.