TOKYO (Reuters) – Asian stocks rallied Tuesday, putting global stocks on track to extend their bull run for a 12th consecutive session as optimism about the global economic recovery and expectations of low interest rates spur investment in riskier assets.
Oil prices soared to a 13-month high due to a deep freeze following a severe snowstorm in the United States, which not only boosted energy demand but also threatened Texas oil production.
MSCI’s widest index of Asia-Pacific stocks outside Japan was up 0.45%, while Japan’s Nikkei was up 0.4% to its 30-year high.
In Hong Kong, the Hang Seng index rose 1.79% to hit a 32-month high in the first trading session since Thursday following the Lunar New Year holiday.
Mainland Chinese markets remain closed during the holiday season until Thursday, while Wall Street was also closed on Mondays.
Ord Minnett adviser John Milroy said that while the stock markets were positive, investors became wary of future inflation risks posed by central bank and government stimulus programs around the world.
“It is clear that interest rates have been low for a while and investor interest in equities remains strong. We will probably see the markets hold for a while,” Milroy told Reuters.
“Gaining traction is the idea that inflation could rise much faster and sooner than the Fed currently thinks. Then if they raise interest rates to fight it, what happens to the stock markets and of course the bond markets. “
The optimistic view of the economy pushed bond yields up, with 10-year US Treasuries up 5 basis points to 1.245% in early Asian trading, the highest level since late March.
Investors are looking to minutes of the US Federal Reserve’s January meeting, to be released Wednesday, for confirmation of its commitment to maintain its moderate policy stance for the foreseeable future. That, in turn, is set up to monitor bond yields.
But some analysts say investors should be wary of bond yields.
“If US bond yields continue to rise, it could mess up stocks,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.
S & P500 futures were up 0.65% to record highs and the MSCI All Countries in the World (ACWI) Index, which has risen every day so far this month, is up slightly.
The successful roll-out of COVID-19 vaccines in many countries raises hopes of further recovery from economic activity hampered by a range of antivirus restrictions.
US President Joe Biden continues his plan to inject an additional $ 1.9 trillion in stimulus into the economy to further stimulate market sentiment.
Oil prices soared to their highs in about 13 months when a winter storm in the US added fuel to their rally in hopes of a further recovery in demand.
Crude oil futures in the US were up 1.1% from $ 60.11 a barrel.
Prices have increased in recent weeks due to tighter inventories, largely due to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and related producers in the wider OPEC + group of producers.
Rising oil prices supported commodity-linked currencies such as the Canadian dollar, while safe-haven currencies, including the US dollar, moved to the background.
The British pound held up at $ 1.3910 and has remained at its highest level since April 2018.
The offshore Chinese yuan overnight hit a 2-1 / 2-year high of 6.4010 per dollar, last reaching 6.4030.
MSCI’s emerging markets currency index also hit an all-time high.
The yen weakened to 105.36 per dollar, moving closer to its four-month low of 105.765 on February 5, while the euro gained 0.1% to $ 1.2142.
In Asia, Bitcoin traded at $ 48,088.28, after its all-time high of $ 49,715 on Sunday.
Additional reporting by Tomo Uetake in Sydney; Editing by Shri Navaratnam