Asian equities rebound, battered bond market tries to stabilize –

Asian equities rebound, battered bond market tries to stabilize

SYDNEY (Reuters) – Asian stocks rebounded on Monday as something like calm returned to bond markets after last week’s wild ride, while advances in the massive US stimulus package underpinned optimism about the global economy. and they raised oil prices.

FILE PHOTO: A passerby wearing a protective mask reflects on the screen showing the exchange rate of the Japanese yen against the US dollar and stock prices on a stock exchange, amid the outbreak of the coronavirus disease (COVID- 19), in Tokyo, Japan, on November 6, 2020 REUTERS / Issei Kato

China’s official manufacturing PMI over the weekend fell short of forecasts, but Japanese figures showed the fastest growth in two years. Investors also have upbeat news from a number of US data to be released this week, including the February payroll report.

What helped the sentiment was that Johnson & Johnson’s recently approved COVID-19 vaccine news releases should begin Tuesday.

MSCI’s broader Asia-Pacific stock index outside of Japan rose 1%, after losing 3.7% last Friday.

Japan’s Nikkei rallied 2.1%, while Chinese blue chips rose 0.8%.

NASDAQ futures bounced 1.2% and S&P 500 futures 0.8%. EUROSTOXX 50 futures and FTSE futures were up 1.0%.

Yields on US 10-year notes stood at 1.40%, from last week’s high of 1.61%. They rose 11 basis points last week to rise 50 basis points so far this year.

“Friday’s bond movements still feel like a pause to breathe, rather than being the catalyst for a move to calmer waters,” said Rodrigo Catril, senior strategist at NAB.

“Market participants remain nervous at the prospect of higher inflation as economies seek to reopen with the help of vaccine implementation, high levels of savings coupled with strong fiscal and monetary support.”

BofA analysts noted that the bear market for bonds was now one of the most severe on record with annualized returns on 10-year US government bond prices falling 29% since last August, with Australia trailing. 19%, the UK 16% and Canada 10%.

The defeat was largely due to expectations for faster US growth, as the House approved President Joe Biden’s $ 1.9 trillion coronavirus aid package and sent it to the Senate.

BofA’s US economist Michelle Meyer raised her forecast for economic growth to 6.5% for this year and 5% next, due to the likelihood of a broader stimulus package, better news on the virus and encouraging data. .

Virus cases in the U.S. are also down 72% from the January 12 peak, and hospitalizations are close behind, BofA added.

Higher U.S. yields, combined with the general shift toward safety, helped the dollar index rebound to 90.787 from a seven-week low of 89.677.

On Monday, the euro was flat at $ 1.2083, compared to last week’s high of $ 1.2242, while the dollar was close to a six-month high against the yen at 106.60.

“Riskier” currencies and those exposed to commodities rebounded a bit after taking a beating late last week, with Australian and Canadian dollars rising and emerging market currencies from Brazil to Turkey looking more stable. .

Non-performing gold was still suffering losses after hitting an eight-month low on Friday en route to its worst month since November 2016. It was the last at $ 1,750 an ounce, just above a low of around $ 1,716.

Oil prices extended their gains ahead of an OPEC meeting this week, where supply could increase. Brent gained 4.8% last week and WTI 3.8%, while both were up about 20% compared to February overall.

Brent last rose $ 1.11 to $ 65.53, while US crude rose $ 1.04 to $ 62.54 a barrel.

Edited by Shri Navaratnam and Lincoln Feast.


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