Asian shares perk up as calmer bonds ease jitters

Reuters HONG KONG/NEW YORK | Updated on March 02, 2021

A pedestrian wearing a face mask walks near an overpass with an electronic board showing stock information, following an outbreak of the coronavirus disease China earlier this year. (file pic)   -  REUTERS

MSCI index of Asia-Pacific shares outside Japan firmed 0.97 per cent, while the Nikkei was slightly down 0.12 per cent

Asia extended the global rally in stocks on Tuesday as a halt in a recent bond markets sell-off eased investor nerves and lifted riskier assets, although oil prices were on the defensive on fears of slowing Chinese energy consumption.

MSCI's broadest index of Asia-Pacific shares outside Japan firmed 0.97 per cent, while Japan's Nikkei was slightly down 0.12 per cent .

Australian shares continued their climb on Tuesday, with the S&P/ASX 200 index rising as much as 1.05 per cent, its highest since February 19, as a roll-out of another vaccine in the US and optimism over a coronavirus relief package boosted hopes of a quicker global economic recovery.

Chinese blue-chips gained 0.58 per cent in early trade while Hong Kong's Hang Seng advanced 0.9 per cent , helped by steady and robust demand from investors in mainland China for shares in the Asian financial hub.

China will begins its annual session of parliament on Friday in Beijing, which is expected to chart a course for economic recovery and unveil a five-year plan to fend off stagnation.

US stocks rallied overnight, with the S&P 500 posting its best day in nearly nine months, as bond markets calmed after a month-long sell-off.

For now, all eyes will be on Australia's central bank, which holds its monthly policy meeting on Tuesday. Analysts expect the Reserve Bank of Australia to hold key rates at a historic low but focus will shift to commentary about its quantitative easing programme.

"There's everything to like about the rally in EU and US equity markets," said Chris Weston, the head of research at Pepperstone Group Ltd in Australia.

"Financials outperformed, with 95 per cent of stocks in the S&P 500 gaining on the day," he said, adding that "clearly investors are seeing the world in a new light".

US stocks were roiled last week when a sell-off in Treasuries pushed the 10-year Treasury yield to a one-year high of 1.614 per cent . The 10-year yield was edging lower in early trade at 1.4204 per cent .

However, demand for riskier assets did not slug the dollar, usually regarded as a safe-haven currency, as investors bet on fast growth and inflation in the US. The US dollar index gained 0.14 per cent in early trade against a basket of currencies to stand at 91.142, within sight of a three-week high hit overnight.

The Australian dollar was down 0.25 per cent at $0.77510 ahead of the RBA meeting.

A stronger greenback weighed on gold, and the precious metal was on the defensive at $1,711.4100 an ounce early Tuesday.

The exuberance in risk assets did not help energy markets. Oil prices fell more than 1 per cent overnight after data showed China's factory activity growth slipped to a nine-month low in February, owing in part to disruptions over the Lunar New Year holiday. There were also fears among energy investors that OPEC may increase global supply following a meeting this week.

Brent crude fell 1.27 per cent to $62.88 a barrel, while US West Texas Intermediate crude lost 1.3 per cent to $59.85.

Published on March 02, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor