Asian stocks perk up after bond sell-off calms
Robust demand from mainland China investors for shares in Hong Kong financial hub
Hong Kong — 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, though 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% while Japan’s Nikkei was slightly down 0.12%.
Australian shares continued their climb on Tuesday, with S&P/ASX 200 index rising as much as 1.05%, its highest since February 19, as a rollout 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% in early trade while Hong Kong’s Hang Seng advanced 0.9%, helped by steady and robust demand from investors in mainland China for shares in the Asian financial hub.
China begins its annual session of parliament on Friday in Beijing and 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.
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 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 in Australia. “Financials outperformed, with 95% 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%. The 10-year yield was edging lower in early trade at 1.4204%.
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% 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% at $0.77510 ahead of the central bank meeting.
A stronger greenback weighed on gold, and the precious metal was on the defensive at $1,711.4100 an ounce early on Tuesday.
The exuberance in risk assets did not help energy markets. Oil prices fell more than 1% 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 oil cartel Opec may increase global supply after a meeting this week.
Brent crude fell 1.27% to $62.88 a barrel, while US West Texas Intermediate crude lost 1.3% to $59.85.
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