© Reuters. Men with umbrellas walk near an electrical panel displaying the Nikkei index at a brokerage in Tokyo
By Anshuman Daga
SINGAPORE (Reuters) – Asian stocks rebounded from two-week lows on Tuesday as rising commodity prices boosted market expectations of a better growth outlook, a day after rising stocks US Treasury yields and the outlook for inflation will hit US tech stocks.
European Eurostoxx 50 futures and FDXc1 futures gained 0.2%, while London-based FFIc1 futures were up 0.3%. E-mini futures for the advanced 0.5%.
MSCI’s broader Asia-Pacific stock index outside of Japan advanced 0.4% to 726.6 after falling to 719.8, the lowest level in two weeks. The indicator is down from last week’s record high, but is still up 9% so far this year.
Encouraged by the rally in commodities, the Australian rose nearly 0.9%. Singapore’s Straits Times Index rose 0.6% and Taiwan rose 0.2%. Hong Kong advanced 1%, while South Korea’s tech-laden Kospi lost 0.3%.
The Japanese markets were closed for public holidays.
“We are in an unprecedented time, but low interest rates are likely to persist long after the global economy has recovered from the pandemic,” said Keith Wade, chief strategist at Schroders (LON 🙂 said in a note.
“For financial markets, such an outlook will intensify the search for yield and will undoubtedly create volatility and bubbles as investors chase returns in a” zero “environment, Wade added.
On Wall Street, high-growth stocks such as Apple (NASDAQ :), Microsoft (NASDAQ 🙂 and Tesla (NASDAQ 🙂 weighed on it, which lost 2.5% on Monday.
Commodity prices strengthened again on Tuesday. Oil prices rose on a tight global supply outlook after US production was hit by frigid weather and an upcoming meeting of major crude producers is expected to keep production under control.
Analysts said that markets were following suit with stronger commodity prices as the increase implied strong economic activity.
It rose 1.1% to $ 66.4, holding firm near a one-year high. it also rose to a one-week high at $ 1,812.6 an ounce as inflation concerns boosted the bullion’s appeal as a hedge.
Strong commodities held the Australian dollar steady at $ 0.79 against the US dollar, nearly a three-year high.
Bond yields have risen sharply this month as prospects for increased fiscal stimulus in the US fueled hopes for a faster economic recovery globally. However, that’s also fueling concerns about inflation, prompting investors to sell growth stocks that have rallied in recent months.
“Real US interest rates are now in positive territory, which has created some concern about the consequences for equity markets,” Cesar Pérez Ruiz, chief investment officer at Pictet Wealth Management, said in a report.
He held steady at 90.026, with the euro rising 0.1% to $ 1.2166. The Japanese yen rose against the dollar to 105.09 per dollar.
Cash Treasuries were not traded in Asia with Tokyo closed for the holidays, but futures firmed slightly and showed an implicit yield of 10-year Treasuries of 1.34%.
Markets will turn their attention to Federal Reserve Chairman Jerome Powell, who will give his semi-annual testimony on Tuesday. Powell is likely to reiterate his commitment to keeping the policy very easy for as long as it takes to drive inflation higher, analysts said.
“In addition to the ever-present question of what may be necessary for the Fed to consider cutting, the most pressing investor interest is at what point the Fed might respond to the level or volatility of interest rates after recent increases.” added. Citi’s strategist said in a note.