TOKYO (Reuters) – Asian equities advanced Tuesday, putting world equities on track to extend their bull run to a 12th session in a row, as optimism over the global economic recovery and expectations of low interest rates drive investment into more risky assets.
Oil prices rose to a 13-month high like a deep freeze due to a severe snowstorm in the US that not only increased demand for power but also threatened oil production in Texas.
MSCI’s broadest index of stocks in Asia and the Pacific outside Japan rose 0.45%, while Japan’s Nikkei rose 0.4% to a 30-year high.
In Hong Kong, the Hang Seng index rose 1.79%, reaching a 32-month high in its first trading session since Thursday after the lunar New Year holiday.
The mainland Chinese markets will remain closed during the holidays until Thursday, while Wall Street was also closed on Monday.
Word Minnett adviser John Milroy said that while stock markets were positive, investors became aware of future inflation risk due to central bank and government stimulus programs around the world.
“There is a clear sense of interest rates remaining low for some time yet, and investors’ appetite for equities to remain strong, we are likely to see markets hold up for some time to come,” Milroy told Reuters.
“Getting traction is the idea that inflation can rise much faster and faster than the Fed is currently thinking. So if they raise interest rates to fight it, what happens to the stock markets and of course the bond markets. ”
The bullish view of the economy raised bond yields, with 10-year US government bonds rising 5 basis points to 1.245% in early Asian trading, the highest since the end of March.
Investors are looking at the minutes of the US Federal Reserve’s January meeting, published on Wednesday, to confirm that they are committed to maintaining its deaf policy stance in the near future. It is again set to keep track of bond yields.
But some analysts say investors should keep an eye on bond yields.
“If US bond yields continue to rise, it may start to disrupt equities,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.
The S & P500 futures traded 0.65% higher at a record high, and MSCI’s all country world index (ACWI), which has risen every single day so far this month, ticked up a bit.
Successful rollouts of COVID-19 vaccines in many countries are creating hope for further recovery in economic activities hampered by various antivirus inhibitors.
US President Joe Biden is pushing ahead with his plan to pump an extra $ 1.9 trillion in stimulus into the economy in a further boost to market sentiment.
Oil prices rose to their highest in about 13 months when a US winter storm added fuel to their demonstration in hopes of further demand.
US crude futures traded 1.1% at $ 60.11 per share. Barrel.
Prices have risen in recent weeks on tightening supplies, mainly due to cuts in production by the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the broader OPEC + group of producers.
Rising oil prices supported commodity-denominated currencies such as the Canadian dollar, while secure port currencies including the US dollar took the back seat.
The British pound held at $ 1.3910 and remained at its highest level since April 2018.
The Chinese yuan offshore hit a 2-1 / 2 year high of $ 6.4010 per dollar overnight and finally at 6.4030.
MSCI’s currency index for new markets also hit record highs.
The yen weakened to 105.36 per share. Dollar and rose closer to the four-month low of 105.765 set on February 5, while the euro rose 0.1% to $ 1.2142.
In Asia, Bitcoin traded at $ 48,088.28, which was a record high of $ 49,715 hit on Sunday.
Further reporting by Tomo Uetake in Sydney; Editing Shri Navaratnam
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