GLOBAL MARKETS-Stocks rally on US recovery prospects.

* MSCI AxJ Index rises 0.4% to a two-week high

* The US dollar index remains near a two-week low

* Asian Stock Markets:

SINGAPORE / NEW YORK, April 6 (Reuters) – Asian stock markets rose on Tuesday as another round of strong US economic data bolstered the global outlook, while currency and bond markets paused to take a breath after a month of rapid gains in the dollar and US Treasury yields.

MSCI’s broader Asia-Pacific equity index outside of Japan advanced 0.4% to a two-week high, while Tokyo’s Nikkei fell slightly below a two-week high. The Dow and the S&P 500 had closed at record highs on Monday.

Overnight, on the heels of an excellent jobs report on Good Friday, data for March showed that an indicator of US services activity hit a record high, while at the same time markets are down. encouraging a massive $ 2 trillion government spending program.

“Taken together, it’s good for the global economy and therefore justification for moving to more cycle-sensitive currency pairs and buying stocks in general,” said Kyle Rodda, market analyst at IG brokerage in Melbourne.

“Yields haven’t moved much, so tech stocks have outperformed,” he said. In Asia, chipmakers pushed Taiwan’s benchmark index up 1% to an all-time high and overall gains lifted Australia’s ASX 200 to a seven-week high.

The Shanghai Composite was stable while the Hong Kong stock market is closed for the holidays.

European markets, which have been closed since Thursday’s close, were also poised for gains with DAX futures up 1.2%, EuroSTOXX 50 futures up 1% and FTSE futures up 0.8%. . S&P 500 futures were flat.

The 10-year benchmark US Treasury yield was flat in New York, and in Asia it fell two basis points to 1.6860% on Tuesday. The US dollar held at $ 1.1810 per euro after posting its steepest drop in several weeks overnight.

“Considering the strength of the US economic news flow since we left Thursday for the Easter holidays, the surprise … is that US bond yields are lower than a the middle of last week and the dollar is weaker, “he said. Ray Attrill, Head of Currency Strategy at National Australia Bank.

The dollar rose a fraction above the yen on Tuesday to 110.25 and held steady elsewhere. The Australian dollar held at $ 0.7647 ahead of a Reserve Bank of Australia policy decision scheduled for 0430 GMT.

The pullback in yields and the dollar follows the main bullish movements during the first quarter, with an increase of 83 basis points in 10-year yields, the largest quarterly gain in a dozen years and a 3.6% increase in the index the dollar, the steepest since 2018.

That has been driven mainly by investors who are betting that the United States will lead the global recovery and force the US Federal Reserve to raise rates earlier than expected.

The Fed’s minutes from its March meeting are due Wednesday, though they won’t address the latest data surprises.

Fed fund markets have valued a full rate hike by the end of 2022, while Eurodollar markets have set it in December.

“What needs to be proven is how the Fed tightens and reassures its flexible average inflation targeting policy,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.

“The last weeks of the dollar’s movement reflect that the markets are advancing despite what the Fed has said,” he added.

The overnight swing in the dollar helped oil prices rise and Brent crude futures rose 1.2% to $ 62.91 a barrel, while US crude rose by the same margin to $ 59.35 a barrel. . Gold rose 0.3% to $ 1,733 an ounce.

Reporting by Tom Westbrook in Singapore and Chibuike Oguh in New York; Editing by Christopher Cushing and Shri Navaratnam


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