SYDNEY (Reuters) – Asian equities rallied on Monday, while a semblance of calm returned to bond markets after last week’s wild ride, while progress on the huge US stimulus package sustained optimism about the global economy and raised oil prices.
China’s official manufacturing PMI missed forecasts over the weekend, but Japanese figures showed the fastest growth in two years. Investors are also relying on optimistic news from a series of US data to be released this week, including the February earnings report.
The sentiment was that news deliveries about the newly approved Johnson & Johnson COVID-19 vaccine should begin on Tuesday.
The MSCI’s broadest index of Asia-Pacific equities outside Japan rose 1%, after falling 3.7% last Friday.
The Japanese Nikkei added 2.1%, while Chinese chips added 0.8%.
NASDAQ futures returned 1.2% and S&P 500 futures 0.8%. EUROSTOXX 50 futures and FTSE futures both increased by 1.0%.
Yields on 10-year US banknotes held at 1.40%, from last week’s peak of 1.61%. They went up 11 basis points last week to increase by 50 basis points from the previous year.
“The link move on Friday still feels like a break for air, rather than a catalyst for a move to calmer waters,” said Rodrigo Catril, a senior strategist at NAB.
“Market participants remain nervous about the prospect of higher inflation as economies try to reopen, helped by the launch of vaccines, high levels of savings, and strong financial and monetary support.”
BofA analysts noted that the bear market was now one of the most severe on record, with the annual yield on 10-year US government bonds falling 29% from August last year, with Australia down 19%. Britain with 16% and Canada with 10%. .
The drop is due in large part to expectations of a faster US rise, as the House passed President Joe Biden’s $ 1.9 trillion coronavirus aid package to the Senate.
US economist BofA Michelle Meyer has raised its economic growth forecast to 6.5% this year and 5% next, due to the likelihood of a larger stimulus package, better news on the virus front and encouraging data. .
Also, cases of the virus in the United States have fallen by 72 percent since January 12, and hospitalizations have followed closely, BofA added.
The higher US yields combined with the overall safety transition helped the dollar index return to 90,787 from the seven-week low of 89,677.
On Monday, the euro was steady at $ 1.2083, compared to last week’s peak of $ 1.2242, while the dollar remained close to a six-month high on the yen at 106.60.
The “riskier” and commodity currencies returned shortly after last weekend, and the Australian and Canadian dollars rose and currencies in the emerging market from Brazil to Turkey look more stable.
Non-yielding gold still posted losses, after hitting a low of eight months on Friday, on its way to the worst month of November 2016. It was last at $ 1,750 an ounce, right over a gutter of about $ 1,716.
Oil prices extended their gains ahead of this week’s OPEC meeting, where supply could rise. Brent gained 4.8% last week and WTI by 3.8%, while both were about 20% higher than February overall.
Brent rose last $ 1.11 to $ 65.53, while US crude rose $ 1.04 to $ 62.54 a barrel.
Editing by Shri Navaratnam and Lincoln Feast.