SYDNEY (Reuters) – Asian stocks rose on Monday, while the dollar remained close to its three-month peak after the approval of a $ 1.9 trillion stimulus bill in the U.S. Senate, a good omen for a global economic recovery, although it also puts new pressure on Treasury bills.
There was also optimistic news in Asia, as China’s exports increased 155% in February compared to the previous year, when much of the economy closed to combat the coronavirus.
BofA analyst Athanasios Vamvakidis argued that the potent mix of US stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar.
“Including the current proposed stimulus package and other advantages of a second-half infrastructure project, the total US fiscal support is six times greater than the EU’s recovery fund,” he said. “The Fed also supports the fact that the US money supply grows twice as fast as that of the eurozone.”
The prospect of even faster growth helped the broader MSCI Asia-Pacific stock index outside Japan to 0.5%. Japan’s Nikkei gained 0.9% and Chinese blue chips 0.7%.
S&P 500 futures were up 0.3% after a sharp turnaround on Friday. EUROSTOXX 50 futures reached Wall Street up 1.2% and FTSE futures 1.3%.
Stock investors were encouraged by US data, showing that non-farm payrolls increased by 379,000 jobs last month, while the unemployment rate fell to 6.2%, in a positive sign for incomes, spending and corporate earnings.
US Treasury Secretary Janet Yellen tried to contain inflation concerns by noting that the real unemployment rate was close to 10% and that there was still a lot of slack in the job market.
However, yields on 10-year US Treasury bonds still hit a 1.625% year-on-year high in the wake of the data, and stood at 1.59% on Monday. Yields increased by a significant 16 basis points during the week, while German yields fell by 4 basis points.
The European Central Bank meets on Thursday amid rumors that it will protest against the recent rise in eurozone yields and perhaps consider ways to contain further increases.
The diverging yield path boosted the dollar against the euro, which fell to a three-month low of $ 1.1892, and was last set at $ 1.1926.
Ned Rumpeltin, European head of foreign exchange strategy at TD Securities, said the $ 1.1950 break in chart support was a bearish development, with a target of $ 1.1800.
“The solid US employment report could be the final piece missing from the stronger dollar narrative,” he added. “This should put the dollar in a much stronger position in relation to other major currencies.”
The dollar index duly skyrocketed to levels not seen since the end of November and stood at 91.897, well above its recent low of 89.677.
He also won in the low-yield yen, reaching a nine-month top at 108.63, and was changing hands for the last time at 108.40.
The jump in yields weighed on gold, which offers no fixed return, and left it at $ 1,713 an ounce and just above the nine-month low.
Oil prices rose to their highest levels in more than a year after Yemen’s Houthi forces fired drones and missiles into the heart of Saudi Arabia’s oil industry on Sunday, raising concerns about production.
Prices had already been supported by a decision by OPEC and its allies not to increase supply in April. [O/R]
Brent rose $ 1.70 a barrel to $ 71.06, while US oil rose $ 1.63 to $ 67.72 a barrel.
Wayne Cole reporting; Editing by Sam Holmes