Stocks, oil surges in Asia after US records, dollar weakened

(Reuters) – Asian stock markets rallied Tuesday after a record day on Wall Street, while bitcoin took a breath after a Tesla Inc approval boosted cryptocurrency by 20%.

Oil also hit its 13-month high, helped by growing optimism about a return in fuel demand.

However, as a sign that positive sentiment in European trading may run out, eurostoxx futures fell 0.05%, London FTSE futures fell 0.12% and E-mini futures for the S&P 500 were flat.

Back in Asia, MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.37% to 722.95 after rising to 730.16 at the end of last month.

Gains were led by Chinese blue chips up 1.67%, while the Hong Kong benchmark rose 0.51% and Korea’s 0.27%, with chip giants taking advantage of bitcoin’s excitement.

Iris Pang, chief economist for Greater China at ING, said the strong performance of the Chinese markets was driven by investors buying before the Chinese New Year holiday, expecting prices to be higher after the holiday.

The Chinese stock exchanges are closed for a week from Thursday.

The Japanese Nikkei rose 0.27%.

Tuesday’s gains in Asia were in line with so-called reflation trades around the world, with global markets pocketing stocks, oil and gold, while US Treasury yields shot to an 11-month high.

“Reflation based on US fiscal stimulus and positive vaccine news remains the main theme for markets,” wrote National Australia Bank strategists.

Expectations have grown that inflation would pick up as governments and central banks pursue massive spending and easy money policies until officials are confident their economies will recover from the coronavirus pandemic.

Wall Street hit its all-time high on Monday when the Nasdaq Composite added nearly 1% and the S&P 500 and Dow Jones Industrial Average around 0.75%.

In more volatile cryptocurrency markets, bitcoin first passed USD 47,000, up 20%, before fluctuating slightly below that level.

Tesla Inc said it had invested about $ 1.5 billion in the virtual currency overnight and expects to accept this as payment for its cars in the future.

Justin d’Anethan, sales manager at digital asset company Diginex, said most of the selling pressure in Asia had been absorbed.

“This morning, after more than $ 1.2 billion in leveraged shorts were liquidated, the usual crypto vendors will probably think twice before dumping their coins,” d’Anethan said.

Oil prices continued to rise to a 13-month high on Tuesday.

Brent rose 45 cents, or 0.74%, US West Texas Intermediate crude oil was $ 58.39 a barrel, up 43 cents, also 0.74%.

“There is a sense that the abundance of oil supplies is disappearing faster than anyone thought possible,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “There seems to be a paradigm shift in the marketplace.”

Spot gold rose 0.37% to $ 1,837 an ounce, a week high, as expectations of a major US economic stimulus package bolster its appeal as an inflation hedge.

Such expectations hit the dollar index, which fell further on Tuesday after a trip late last week on a weaker-than-expected jobs report. It was last down 0.25% to 90,728.