SYDNEY (Reuters) – Asian stocks soared to record highs on Monday as successful rollouts of coronavirus vaccines globally created hopes for a rapid economic recovery amid Washington’s new fiscal assistance, while oil prices rose amid rising tensions in the Middle East.
MSCI’s broadest index of stocks in Asia-Pacific outside Japan jumped 0.4% to 736.4.
Japan’s Nikkei climbed 1.1% despite data showing the country’s recovery from its worst post-war recession slowed in Q4.
Australia’s benchmark index added 0.9%, while E-mini futures for the S&P 500 rose 0.3% in early Asian trading.
The markets in China and Hong Kong are closed for the lunar New Year holiday. US stock markets will be closed Monday for the president’s day off.
The highlight of the week is likely to be minutes from the US Federal Reserve’s meeting in January, when politicians decided to leave rates unchanged.
Data on inflation are due from the UK, Canada and Japan, while on Friday major economies, including the US, will release the Preliminary Purchasing Managers’ Index (PMI) in February.
While economists expect inflation to remain benign for some time to come, the so-called “reflection trade” has been gathering steam in recent days, largely driven by coronavirus vaccines and hopes of massive tax spending under US President Joe Biden.
Biden pushed for the first major legislative achievement of his term and approached a bipartisan group of local officials for help with his $ 1.9 trillion coronavirus relief plan.
“In our opinion, the stock markets can continue to perform as long as the increase (in inflation) is gradual. However, unruly moves would certainly hurt investor sentiment, ”said Esty Dwek, Global Market Strategy Leader, Natixis Investment Managers Solutions.
“Credit spreads have already tightened sharply, but they still have room to absorb some higher interest rates, making us more comfortable with credit risk than interest rate risk,” Dwek added.
“Commodities would be recipients of an inflation cycle, but they can still continue to recover without high core inflation as economies reopen and demand rises.”
Oil prices rose to the highest since January 2020 in the hope that the US stimulus will boost the economy and fuel demand.
Prices were also high after a Saudi coalition fight in Yemen said it intercepted an explosive-laden drone fired by the Iran-oriented Houthi group, creating fears of new tensions in the Middle East. [O/R]
Burnt raw rose $ 1 to $ 63.43 per barrel. Barrel. U.S. crude oil gained $ 1.2 to $ 60.7.
On Friday, the S&P 500 and Nasdaq set record highs. The Dow closed 0.1% higher at 31,458.4 points, the S&P 500 rose 0.5% to 3,934.83 and the Nasdaq added 0.5% to 14,095.47. [.N]
Action in currencies was subdued.
The dollar was slightly higher against the Japanese yen at 105.01, while the euro rose to $ 1.2125 and the British pound rose 0.3% to $ 1.3886. The risk-sensitive Australian and New Zealand dollars each rose by 0.1%.
It left the dollar index stable at 90,426.
Bitcoin was hardly changed in early Asian trading to $ 47,994, below a record high of $ 49,714.66. It created gains of approx. 20% in a milestone marked by the support of larger companies such as Elon Musk’s Tesla.
Reporting by Swati Pandey in Sydney; Clip by Kim Coghill and Jacqueline Wong
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