SYDNEY (Reuters) – Asian equities rose on Monday as the dollar remained close to three-month highs after the US Senate approved a $ 1.9 trillion stimulus bill predicting an economic rebound although it also put new pressure on the Treasury.
There was also optimistic news in Asia, as China’s exports rose 155% in February compared to a year earlier, when much of the economy closed to fight the coronavirus.
BofA analyst Athanasios Vamvakidis argued that the powerful mix of US stimulus, faster reopening and increased consumer firepower was a clear positive for the dollar.
“Including the proposed current stimulus package and an added benefit of a second-half infrastructure bill, total US tax support is six times greater than the EU recovery fund,” he said. “The Fed also supports the fact that the U.S. money supply is growing twice as fast as the eurozone.”
The prospect of even faster growth helped MSCI’s broader Asia-Pacific stock index outside the Japanese firm of 0.5%. The Japanese Nikkei gained 0.9% and the Chinese blue chips 0.7%.
S&P 500 futures rose 0.3%, following a strong change on Friday. EUROSTOXX 50 futures caught up with Wall Street by rising 1.2% and FTSE futures by 1.3%.
Equity investors worried about U.S. data showing non-farm payrolls rose 379,000 jobs last month, while the unemployment rate fell to 6.2% in a sign positive income, expenditure and business profits.
U.S. Treasury Secretary Janet Yellen tried to counter inflation concerns by noting that the real unemployment rate was closer to 10% and that there was still a lot of strike in the labor market.
Still, ten-year U.S. Treasury yields still hit a one-year high of 1.625% as a result of the data and stood at 1.59% on Monday. Yields rose 16 basis points during the week, while German yields fell 4 basis points.
The European Central Bank is meeting on Thursday amid talks to protest the recent rise in eurozone yields and perhaps reflect on how to curb further increases.
The divergent trajectory on yields pushed the dollar against the euro, which fell to a three-month low of $ 1.1892 and was last set at $ 1.1926.
Ned Rumpeltin, European head of TD Securities ’FX strategy, said the breakdown of the chart support at $ 1.1950 was a bearish development that was set at $ 1.1800.
“The solid U.S. employment report could be the last missing piece of the USD’s strongest narrative,” he added. “This should place the dollar in a much stronger position compared to other major currencies.”
The dollar index rose sharply to levels not seen since late November and stood at 91,897 for the last time, well above its recent low of 89,677.
It also gained in the low-yielding yen, reaching a nine-month high of 108.63, and changed hands for the last time to 108.40.
The jump in yields has weighed on gold, which offers no fixed yield, leaving it at $ 1,713 an ounce and just above the nine-month low.
Oil prices rose to record highs in more than a year after Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry on Sunday, raising concerns about production.
Prices had already been backed by the decision by OPEC and its allies not to increase supply in April. [O/R]
Brent rose $ 1.70 a barrel to $ 71.06, while US crude rose $ 1.63 to $ 67.72 a barrel.
Wayne Cole Reports; Edited by Sam Holmes