SHANGHAI (Reuters) – Asian equities rose on Friday after U.S. President Joe Biden signed a $ 1.9 trillion stimulus law and after a meeting of the European Central Bank, which sparked a withdrawal of bond yields and alleviated global concerns about rising inflation.
But European stocks, which had jumped at the ECB meeting on Thursday, appeared to be withdrawing by a maximum of a year later. Futures for the entire Euro Stoxx 50 region fell 0.03% and German DAX and FTSE futures fell around 0.2% in early trading.
Biden signed the stimulus legislation ahead of a televised speech in which he pledged to take aggressive steps to speed up vaccinations and bring the country back to normal on July 4th.
The signing of the US rescue plan provided a new impetus to market sentiment after the European Central Bank said it was willing to speed up the printing of money to avoid borrowing costs, using its pandemic emergency purchase program (PEPP) of 1.85 trillion euros with more generosity. over the next few months to stop any unwarranted increase in debt financing costs.
That and a better-than-expected U.S. government bond auction could support a rebound in technology stocks and a rotation between growth and value stocks in the coming weeks, said Cliff Zhao, China’s chief strategist Construction Bank International in Hong Kong.
“But in the second quarter, the market (will be) very volatile and, above all, when we look at the US dollar, it is much stronger than expectations at the end of last year. So I think the strong US dollar may affect some liquidity conditions in emerging markets, ”he said.
The broader MSCI index of Asia-Pacific equities outside of Japan rose 0.53%, supported by technological gains.
Seoul’s KOSPI added 1.39%, Taiwan’s shares rose 0.27% and Australia’s ASX 200 gained 0.79%.
The Japanese Nikkei rose 1.58% and the blue China CSI300 index rose 0.05% as consumer and high-tech companies declined.
U.S. Treasury yields were highest on Friday, with a ten-year yield at 1.5512% after falling to 1.475% overnight, the first foray below 1.5% in a week.
The ten-year German yield stood at -0.331% for the last time after surpassing the three-week low of -0.367%.
“There may be some disappointment (the ECB) did not expand its bond-buying program, but that is largely offset by companies accelerating purchases,” said Michael McCarthy, chief market strategist at CMC Markets.
On Wall Street, easing inflation concerns helped support the actions. The Dow Jones Industrial Average rose 0.58% and the S&P 500 gained 1.04%, both to highs. The Nasdaq Composite added 2.52%.
Sentiment also rose thanks to weekly unemployment claims data, which pointed to the recovery of the US labor market, as the deployment of vaccines contributed to the economic reopening.
Analysts largely expect inflation to rise as vaccine deployment leads to reopening, but concerns persist that the Biden stimulus package could overheat the economy.
The dollar gained 0.22% against the yen to 108.73 and the euro fell 0.18% on the day to $ 1.1963. The dollar index, which tracks the greenback against a basket of six big rivals, rose 0.14% to 91,568.
Oil prices retreated from strong gains as the dollar was confirmed, with U.S. crude falling 0.41% to $ 65.75 a barrel. Brent crude lost 0.27% to $ 69.44 a barrel.
Spot gold prices fell 0.22% to $ 1,717.70 an ounce.
Report by Andrew Galbraith in Shanghai and Matt Scuffham in New York; Edited by Stephen Coates