TOKYO / NEW YORK (Reuters) – Asian equities rebounded to a two-month low on Wednesday after bond yields fell after a well-received auction and Chinese equities found a foothold after heavy falls in concerns about tightening politics.
MSCI’s Asia-Pacific levy index rose 0.4%, a day after reaching a two-month low. The CSI300 index of mainland China’s A shares rose 0.7% in early trading.
The rebound came after Chinese stocks had fallen to their lowest levels since mid-December the day before, with the prospect of a tighter policy and a slowdown in the economic recovery.
Japan’s Nikkei didn’t change much, while e-mini futures for the S&P 500 lost 0.25%, erasing previous gains.
“Markets are paying close attention to bonds. Because profits are not growing so fast right now, the high stock prices we have now will become unsustainable if bond yields rise further and hurt their valuation, ”said Hiroshi Watanabe, senior economist at Sony Financial Holdings .
Yield on 10-year benchmark banknotes fell to 1.539%, after reaching 1.626% on Friday, after Tuesday’s auction of $ 58 billion in three-year U.S. banknotes was well received.
Still, many investors in the market kept up, and the next tests of investors ’willingness for public debt will have to be delivered by the end of this week in the form of ten- and thirty-year auctions.
“While the bond market has stabilized somewhat, pressures will remain,” said Naokazu Koshimizu, chief strategist at Nomura Securities rates.
“It has come at a price in the future normalization of the Fed’s monetary policy, and the Fed’s policy will eventually become neutral. But it has not yet come at a price in the possibility of its policy tightening.”
Some investors see a real risk of an overheated US economy and higher inflation thanks to the planned spending by the Biden administration, including a $ 1.9 trillion stimulus and an even bigger initiative in matter of infrastructures.
On Wall Street, each of the major averages closed higher, led by a nearly 4% gain on the Nasdaq, giving the heavy technology index the best day since Nov. 4.
The index has been highly susceptible to escalation rates and Monday’s pullback left it down more than 10% since the Feb. 12 close, confirming what is widely considered a correction.
“Today the ten years have fallen a bit, and that puts pressure on valuations, so the technology is performing well. The market is about to get comfortable at this rate level,” said Kristina Hooper. Invesco’s leading global market strategist in New York.
The faster deployment of COVID-19 vaccines in some countries and the planned stimulus package in the United States helped strengthen a brighter global economic outlook, the Organization for Economic Co-operation and Development said, while increasing its growth forecast for 2021.
In the foreign exchange markets, the dollar index retreated from a 3.1 / 2-month high of 92,506 to stand at 92,138.
The euro was confirmed at $ 1,1881, against a three-and-a-half-month low of $ 1.18355, while the yen changed hands at 108.76 per dollar, above the nine-month low of 109,235 set on previous day.
Offshore Chinese yuan rose to 6.5235 per dollar from Tuesday’s three-month low of 6.5625.
Oil prices fell as concerns about a supply disruption in Saudi Arabia eased.
U.S. crude futures slipped 0.3% to $ 63.72 a barrel, far from a nearly 2 1/2-year high of $ 67.98 touched on Monday.
Brent crude futures were down $ 67.52 a barrel, down 72 cents or 1.06%.
Graph: Global assets: here
Chart: Global currencies vs. dollar: here
Graph: Emerging Markets: Here
Chart: MSCI All Country World Index Market Leader: Here
Report by Hideyuki Sano in Tokyo and Matt Scuffham in New York; Edited by Sam Holmes and Richard Pullin