SYDNEY (Reuters) – Asian equities rebounded from previous losses on Tuesday, lifted by stronger US equity futures and central bank comments aimed at easing fears about rising bond yields and inflation .
A decline in US bond yields also boosted equity markets.
Japan’s Nikkei rallied 1.02% on Tuesday afternoon, while the broader MSCI index of Asia-Pacific equities outside of Japan was 0.10% higher.
Chinese blue chips added 0.03%, after reaching their lowest level this year.
People’s Bank of China Vice Governor Chen Yulu told Yicai Global that China’s money supply would only grow to match GDP growth and that the country’s central bank did not see the need for a significant stimulus support in the next five years. [bit.ly/3btQ11P]
NASDAQ futures bounced 1.1% and S&P 500 futures 0.73%. However, European futures were slightly lower, with EUROSTOXX 50 futures 0.13% and FTSE futures 0.25%.
“I suspect it’s the one that brings the best tone to Asia,” said Stephen Miller, GSFM Funds Management market strategist, referring to U.S. futures and central banker statements.
“Occasionally, soothing comments from officials (whether PBOC officials, whether Fed Reserve, ECB or Reserve Bank of Australia officials) could calm markets, but I think all of this would be short-lived. if US bond yields continue to go higher, and I think there is a significant risk of that. “
Miller added that declining 10-year U.S. Treasury bond yields also helped sentiment.
U.S. Treasury Secretary Janet Yellen said Monday that President Joe Biden’s coronavirus aid package would provide sufficient resources to fuel a “very strong” economic recovery in the U.S. and noted that “there are tools” for deal with inflation.
Despite positive indications, investors are still in conflict over whether the stimulus will help global growth pick up more quickly due to the COVID-19 recession or cause the world’s largest economy to overheat and lead to runaway inflation. .
“The chances of seeing more inflation in the economy increase significantly with the monetary policy actions and fiscal policy actions we are seeing around the world,” Goldman Sachs CEO David Solomon said at a conference in Sydney for webcast.
“There is certainly a reasonable outcome in which inflation is accelerating faster than people expect and this will obviously have an impact on markets and volatility.”
The technology sector and other high-value companies have been highly susceptible to rising rates.
Australian equities tracked overnight gains on Wall Street, with the S & P / ASX 200 main index rising to 1.04% on Tuesday. However, the shares of Australian technology slipped for the sixth consecutive session in line with its American counterparts.
The index returned these gains to be only 0.48% higher in the afternoon trading after the fall in technology. Hong Kong’s Hang Seng advanced 1.4%, while South Korea’s KOSPI fell 0.74%.
U.S. economic data pointed to a continued recovery, as the Commerce Department said wholesale inventories rose solidly in January despite rising sales, suggesting that investment in inventory could again contribute to first quarter growth.
On Wall Street, the Dow advanced overnight, while the Nasdaq fell more than 2%, marking a drop of more than 10% since closing the high on February 12 and confirming a correction in the value of the ‘index.
The Dow Jones Industrial Average rose 0.97%, the S&P 500 lost 0.54% and the Nasdaq Composite fell 2.41%.
“If rates rise because people are optimistic about economic growth, this continues to support stock prices,” said Tom Hainlin, global investment strategist at Ascent Bank’s private wealth group. American bank in Minneapolis.
U.S. Treasury yields have been advancing as investors raise inflation and the optimistic outlook for the U.S. economy as it emerges from the coronavirus pandemic.
In foreign exchange markets, the dollar index remained close to a 3-1 / 2-month high relative to its rivals, as expectations of a faster economic normalization of the pandemic in the United States put the currency in advantage. The euro rose 0.1% to $ 1,185.
Oil prices rose on Tuesday, helped by a likely decline in crude inventories in the United States, the world’s largest fuel consumer.
Brent crude futures rose 56 cents, up 0.82%, to $ 68.80 a barrel. U.S. crude futures were 50 cents, 0.75% higher, at $ 65.55.
Spot gold added 0.4% to $ 1,687.66 an ounce.
Report by Paulina Duran in Sydney and Matt Scuffham in New York; Edited by Christian Schmollinger and Jacqueline Wong