HONG KONG (Reuters) – Asian stocks rallied on Tuesday and paved the way for global stocks to extend the bull run for the 12th straight session as investors seized a coronavirus vaccine launch to maintain the global economic recovery is well under way.
Oil prices rose to 13-month highs as it froze due to a severe snowstorm in the United States, not only increased energy demand but threatened oil production in Texas .
Asia’s growing stocks paved the way for renewed optimism in world markets.
The S & P500 futures rose 0.5% and the MSCI World Index (ACWI), which has risen every day so far this month, rose slightly.
MSCI’s broader Asia-Pacific stock index outside of Japan rose 0.62%, while Japan’s Nikkei rose 1.4% to a 30-year high.
In Hong Kong, the Hang Seng index rose 1.4% to a 32-month high, while Australia’s S & P / ASX200 gained 0.7% during the session. Mainland Chinese markets will remain closed for holidays until Thursday.
The positive sentiment also spread to Bitcoin, which flirted with breaking the $ 50,000 barrier.
Bitcoin was trading at $ 49,323.56 in the Asian trading session in the afternoon, slightly below its record high of $ 49,715 on Sunday.
Head of JPMorgan’s private banking investment strategy in Asia, Alex Wolf, said the ongoing deployment of the coronavirus vaccine gave investors confidence that global growth would be protected in 2021.
“This is a positive factor because we are entering the process of economic normalization,” Wolf said.
John Milroy, an adviser to Ord Minnett, said that while stock markets were positive, investors were wary of future inflation risk due to stimulus programs from central banks and governments that exist around the world.
“There is a clear feeling that rates will remain low for some time and that investors’ appetite for stocks will remain strong, we will probably see that markets will remain for some time,” Milroy told Reuters.
“Gaining strength is thinking that inflation could rise much faster and sooner than the Fed is currently thinking. Then, if the rates increase to combat it, it happens with the equity markets and, of course, with the bond markets ”.
The bullish outlook for the economy raised bond yields, with the 10-year US Treasury gaining 5 basis points to 1.24% in Asian trade, the highest since the end of March.
Investors are looking for the minutes of the January meeting of the U.S. Federal Reserve, which is due to be released on Wednesday, to confirm their commitment to maintain their political stance in the near future. This, in turn, is intended to keep a tab on bond yields.
But some analysts say investors should monitor bond yields.
“If US bond yields continue to rise, this could start to worry stocks,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.
Wolf said JPMorgan’s private bank predicted U.S. 10-year yields could reach 1.5% by the end of 2021, as investors again bet on an additional economic stimulus that could help the prospects for global growth.
“Increasing yields is not a major concern for the rest of the world. It is the pace of growth that tends to matter most from an Asian perspective. If there is a rapid repetition, this can have a negative effect on emerging markets, ”he said.
U.S. President Joe Biden is moving forward with his plan to boost an additional $ 1.9 trillion stimulus to the economy, in a new boost to market sentiment.
US crude futures traded up 1.1% at $ 60.11 a barrel.
Additional reports from Tomo Uetake in Sydney; Edited by Shri Navaratnam and Richard Pullin