Asia prepares world shares for an prolonged bull run on financial optimism By Reuters
© Reuters. FILE PHOTO: A man stands on an overpass with an electronic board showing the Shanghai and Shenzhen stock indices in Shanghai
From Hideyuki Sano
TOKYO (Reuters) – Asian stocks rose Tuesday, setting world stocks on track to extend their bull run for the 12th consecutive year as optimism about the global economic recovery and expectations of low interest rates fuel investment in riskier assets.
Oil prices soared to a 13-month high as a deep freeze caused by a severe blizzard in the US not only boosted electricity demand but also threatened oil production in Texas.
MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan rose 0.45% and rose 0.4% to a 30-year high.
In Hong Kong, the value rose 1.79%, hitting a 32-month high in its first trading session since the Thursday after the New Year holiday.
Markets in mainland China will remain closed through Thursday on the holidays, while Wall Street was also closed on Monday.
Ord Minnett advisor John Milroy said while stock markets were positive, investors were concerned about future inflation risk, given the central bank and government stimulus programs in place around the world.
“It is clear that interest rates will remain low for some time and investor appetite for stocks will remain strong. We will likely see the markets hold up for some time,” Milroy told Reuters.
“Gaining traction is the thought that inflation could rise much faster and earlier than the Fed is currently thinking. Then if they raise rates to counter what is happening to the stock markets and of course the bond markets?”
The bullish view of the economy lifted bond yields, with 10-year US Treasuries rising 5 basis points to 1.245% in early Asian trading, the highest since late March.
Investors look forward to the minutes of the US Federal Reserve’s January meeting due to be released Wednesday to confirm its commitment to maintain its cautious policy stance for the near future. This in turn is intended to keep an eye on bond yields.
However, some analysts say investors should keep an eye on bond yields.
“If US bond yields continue to rise, it could unsettle stocks,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui (NYSE 🙂 DS Asset Management.
Futures rose 0.65% to a record level, and MSCI’s All Country World Index (ACWI), which has risen every day so far this month, rose slightly.
The successful rollout of COVID-19 vaccines in many countries gives hope for a further recovery in economic activity hampered by a number of antivirus restrictions.
US President Joe Biden is pushing ahead with a plan to inject an additional $ 1.9 trillion in stimulus into the economy to further boost market sentiment.
Oil prices rose to their highest level in about 13 months as a US winter storm fueled their rally in hopes of further recovery in demand.
Futures rose 1.1% to $ 60.11 a barrel.
Prices have risen in recent weeks as supply has tightened, mainly due to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and related producers in the broader OPEC + producer group.
Rising oil prices supported commodity-linked currencies such as the Canadian dollar, while safe-haven currencies such as the US dollar took a back seat.
The British pound remained at $ 1.3910, its highest level since April 2018.
The offshore hit a 2-1 / 2 year high of 6.4010 per dollar overnight, most recently at 6.4030.
The MSCI Emerging Markets Currency Index also hit a record high.
The yen weakened to 105.36 per dollar, nearing its four-month low of 105.765, set on February 5, while the euro rose 0.1% to $ 1.2142.
Asia traded at $ 48,088.28, up from a record high of $ 49,715 on Sunday.