SYDNEY (Reuters) – Asian stocks hit record highs on Monday and oil surged to a peak of over a year as the successful rollout of coronavirus vaccines worldwide sparks hopes for a speedy economic recovery amid new fiscal support from Washington.
MSCI’s widest index of Asia-Pacific stocks outside of Japan rose 0.4% to 736.4.
Japan’s Nikkei climbed 1.3%, despite data showing that the country’s recovery from its worst post-war recession slowed in the fourth quarter.
Australia’s benchmark index rose 1%.
E-mini futures for the S&P 500 were up 0.2% in early Asian trading. The US stock markets are closed on Monday due to Presidents Day.
The week’s highlight will likely be the minutes of the US Federal Reserve meeting in January, where policymakers decided to leave rates unchanged.
Inflation data comes from the UK, Canada and Japan, while major economies, including the United States, will release February’s preliminary purchasing managers indices (PMI) on Friday.
While economists expect inflation to remain favorable for some time to come, the so-called “reflation trade” has been gaining steam in recent days, largely led by coronavirus vaccines and hopes of massive fiscal spending under US President Joe Biden.
Biden pushed for the first major legislative feat of his tenure, turning to a bipartisan group of local officials for help with his $ 1.9 trillion coronavirus plan.
“In our view, equity markets can continue to do well as long as the rise (in inflation) is gradual. But unruly moves would certainly hurt investor sentiment, ”said Esty Dwek, head of global market strategy, Natixis Investment Managers Solutions.
“Credit spreads have already tightened significantly, but they still have room to absorb somewhat higher yields, making us more familiar with credit risk than interest rate risk,” added Dwek.
“Commodities would benefit from an inflation cycle, but they can still recover without high core inflation as economies reopen and demand picks up.”
Oil prices climbed to their highest levels since January 2020 in the hope that US stimulus packages will boost the economy and fuel demand. [O/R]
Brent crude oil rose 61 cents to $ 63.04 a barrel. US crude oil gained 83 cents to $ 60.03.
On Friday, the S&P 500 and Nasdaq hit record highs. The Dow finished 0.1% higher at 31,458.4 points, the S&P 500 gained 0.5% to 3,934.83 and the Nasdaq added 0.5% to 14,095.47. [.N]
Action in currencies has been muted.
The dollar was slightly higher against the Japanese yen at 105.07, while the euro remained flat at $ 1.2119 and the British pound gained 0.1% at $ 1.3868. The risk-sensitive Australian and New Zealand dollar remained unchanged.
That left the dollar index stable at 90,426.
Bitcoin barely changed during early Asian trading at USD 48,722, slightly below a record high of USD 49,000. It posted a profit of about 20% in a milestone week marked by the approval of big companies like Tesla from Elon Musk.
Reporting by Swati Pandey in Sydney; Editing by Kim Coghill