SYDNEY (Reuters) – Asian equities recovered on Tuesday from previous losses, raised by stronger US futures and central bank comments aimed at easing fears about rising bond yields and inflation.
A decline in US bond yields has also boosted stock markets.
Japan’s Nikkei rose 1.02% on Tuesday afternoon, while the broader MSCI index of Asia-Pacific equities outside Japan was 0.10% higher.
Chinese chips added 0.03% after reaching the lowest level this year.
People’s Bank Vice Governor of China Chen Yulu told Yicai Global that China’s money supply will only increase to match GDP growth, and the country’s central bank has not seen the need for major stimulus support in the next five years. . [bit.ly/3btQ11P]
NASDAQ futures returned 1.1% and S&P 500 futures 0.73%. However, European futures contracts were slightly lower, with EUROSTOXX 50 futures down 0.13% and FTSE futures 0.25% lower.
“I suspect this is the one that drives the best tone in Asia,” said Stephen Miller, market strategist for GSFM Funds Management, referring to US futures and the central banker’s remarks.
“From time to time, reassuring comments from officials – whether PBOC officials, whether Fed Reserve, ECB or Reserve Bank of Australia officials – could calm markets, but I think all this would be short-lived if US bond yields continues to go higher, and I think there is a significant risk. ”
Miller added that a reduction in 10-year Treasury bond yields in the US also helped sentiment.
U.S. Treasury Secretary Janet Yellen said Monday that President Joe Biden’s coronavirus aid package will provide sufficient resources to fuel a “very strong” economic recovery in the United States and said “there are tools” to deal with inflation.
Despite the positive indications, investors remain in conflict over whether the stimulus will help global growth recover faster from the COVID-19 recession or cause the world’s largest economy to overheat and lead to runaway inflation.
“The chance of seeing more inflation in the economy is significantly increased by the monetary and fiscal policy actions we see around the world,” Goldman Sachs chief executive David Solomon told a conference in Sydney. via webcast.
“There is certainly a reasonable outcome where inflation is accelerating faster than people expect, and this will obviously have an impact on markets and volatility.”
The technology sector and other highly regarded companies have been extremely sensitive to rising rates.
Australian stocks followed overnight gains on Wall Street, with the S & P / ASX 200 main index rising to 1.04% on Tuesday. However, Australian technology stocks fell for the sixth straight session, in line with their US counterparts.
The index returned these gains by only 0.48% higher in afternoon trading, after the decline in technology. Hong Kong’s Hang Seng rose 1.4 percent, while South Korea’s KOSPI fell 0.74 percent.
US economic data showed a steady recovery, as the Commerce Department said wholesale stocks rose solidly in January, despite rising sales, suggesting that investment in stocks could again contribute to growth in the first quarter.
On Wall Street, the Dow advanced overnight, while the Nasdaq fell more than 2%, marking a drop of more than 10% since the February 12 close 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 more and more as people become optimistic about growth, it continues to support stock prices,” said Tom Hainlin, global investment strategist at Ascent Private Wealth Group in Bank Wealth Management. from Minneapolis.
US Treasury yields have advanced as investors have seen higher inflation and more optimistic outlooks for the US economy as it emerges from the coronavirus pandemic.
In foreign exchange markets, the dollar index remained close to 3-1 / 2 months against its rivals, as expectations of a faster economic recovery from the US pandemic put the currency ahead. The euro rose 0.1% to $ 1,185.
Oil prices rose on Tuesday, helped by a likely decline in crude oil stocks in the United States, the world’s largest fuel consumer.
In the long run, crude oil rose 56 cents, or 0.82 percent, to $ 68.80 a barrel. US futures contracts 50 cents or 0.75% higher at $ 65.55.
Spot gold added 0.4% to $ 1,687.66 an ounce.
Reporting by Paulina Duran in Sydney and Matt Scuffham in New York; Editing by Christian Schmollinger and Jacqueline Wong