TOKYO (Reuters) – Asian equities advanced on Tuesday, launching global action to extend its bullish run for the 12th consecutive session as optimism about the global economic recovery and low interest rate expectations drive investments in riskier assets.
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.
MSCI’s broader Asia-Pacific stock index outside of Japan rose 0.45%, while Japan’s Nikkei rose 0.4% to a 30-year high.
In Hong Kong, the Hang Seng index rose 1.79% to a 32-month high in its first trading session since the Thursday following the Lunar New Year holidays.
Mainland Chinese markets will remain closed for holidays until Thursday, while Wall Street was also closed on Monday.
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 US Treasury at ten years gaining 5 basis points to 1.245% in initial Asian trade, the highest since late 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.
The S & P500 futures traded 0.65% higher at a record level and MSCI’s global all-country index (ACWI), which has risen daily so far this month, rose slightly.
The successful deployment of COVID-19 vaccines in many countries raises hopes of further recovery from economic activities hampered by the range of antivirus sidewalks.
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.
Oil prices rose to a 13-month high as a U.S. winter storm added fuel to its rise in hopes of picking up demand.
US crude oil futures traded 1.1% at $ 60.11 a barrel.
Prices have risen in recent weeks to harden supplies, mainly due to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in OPEC + ‘s broader producer group. .
Rising oil prices supported commodity-linked currencies, such as the Canadian dollar, while safe haven currencies, including the U.S. dollar, took a back seat.
The British pound remained steady at $ 1.3910, remaining at its highest levels since April 2018.
The Chinese offshore yuan hit a 2-1 / 2-year high of $ 6.4010 a night and stood at 6.4030 for the last time.
MSCI’s emerging market currency index also hit a record high.
The yen weakened to 105.36 per dollar, approaching the four-month low of 105.765 set on February 5, while the euro rose 0.1% to $ 1.2142.
In Asia, Bitcoin was trading at $ 48,088.28, with a record $ 49,715 on Sunday.
Additional reports from Tomo Uetake in Sydney; Edited by Shri Navaratnam