SYDNEY (Reuters) – Asian stocks hit record highs Monday as the successful rollout of coronavirus vaccines worldwide sparks hopes for a speedy economic recovery amid new fiscal support from Washington as oil prices soared amid heightened tensions in the Middle East.
Signals for Europe and the United States were also positive, with eurostoxx 50 futures at 0.5%, the German DAX at 0.7% and London FTSE futures at 0.8%.
E-mini futures for the S&P 500 are up 0.5%, although US stock markets will be closed Monday for Presidents Day.
MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.6% to 738.23, with all major indices in green.
Japan’s Nikkei climbed 1.9%, regaining the 30,000-point level for the first time in more than three decades, despite data showing that the country’s recovery slowed from its worst post-war recession in the fourth quarter.
Australia’s benchmark index added 0.9%.
The markets in China and Hong Kong are closed during the Chinese New Year holiday.
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 preliminary purchasing managers’ indices (PMI) for February 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 vaccines against the coronavirus 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.
Prices were also high after a Saudi-led coalition fight in Yemen said it intercepted an explosive-laden drone fired by the Iran-linked Houthi group, sparking fears of renewed tensions in the Middle East. [O/R]
Brent crude oil rose $ 1.2 to $ 63.66 a barrel. US crude oil gained $ 1.4 to $ 60.88.
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 105.08, while the euro rose to $ 1.2139 and the British pound gained 0.4% to $ 1.3894. The risk-sensitive Australian and New Zealand dollars were each up 0.3%.
That left the dollar index lower at 90,296.
Bitcoin fell more than 3% to $ 46,992, below a record high of $ 49,714.66. 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; Edited by Kim Coghill and Jacqueline Wong