SYDNEY (Reuters) – Asian equities rebounded Monday as some appearance of calm returned to bond markets after last week’s wild ride, as advances in the massive US stimulus package supported optimism about the global economy and pushed oil prices higher.
The official PMI for the manufacturing sector in China did not help expectations last weekend, but Japanese data showed the fastest growth in two years. Investors are also counting on positive news from a string of US data out this week, including the February salary report.
Sentiment was bolstered by news outlets of the newly approved Johnson & Johnson COVID-19 vaccine on Tuesday.
MSCI’s widest index of Asia-Pacific stocks outside Japan rose 1% after a 3.7% loss last Friday.
Japan’s Nikkei was up 2.1%, while Chinese blue chips added 0.8%.
NASDAQ futures bounced 1.2% and S&P 500 futures 0.8%. EUROSTOXX 50 futures and FTSE futures both increased by 1.0%.
Yields on US 10-year bonds were 1.40% from last week’s high of 1.61%. They climbed 11 basis points last week and are up 50 basis points compared to the year so far.
“Friday’s bond moves still feel like a pause for air, rather than a catalyst for a move towards calmer waters,” said Rodrigo Catril, a senior strategist at NAB.
“Market participants remain nervous about the prospect of higher inflation as economies attempt to reopen, aided by the introduction of vaccines, high savings and solid fiscal and monetary support.”
Analysts at BofA noted that the bear bond market is now one of the toughest on record, with annual 10-year US Treasury yields down 29% since August last year, with Australia 19%, UK 16% and Canada 10 %. .
The defeat was largely due to expectations of faster US growth when the House approved President Joe Biden’s $ 1.9 trillion coronavirus relief package and sent it to the Senate.
BofA US economist Michelle Meyer raised her forecast for economic growth to 6.5% this year and 5% next year, due to the likelihood of the larger stimulus package, better news on the virus front and encouraging data.
US virus cases were also down 72% since a Jan. 12 peak, and hospitalizations are closely following, BofA added.
Higher US interest rates coupled with the general shift to safety helped the dollar index rebound to 90,787 from a seven-week low of 89,677.
On Monday, the euro was steady at $ 1.2083, compared to last week’s peak of $ 1.2242, while the dollar was close to a six-month high on the yen at 106.60.
“Riskier” currencies and currencies exposed to commodities bounced off a bit after a blow late last week, with the Australian and Canadian dollars rising and emerging market currencies from Brazil to Turkey looking more stable.
Non-performing gold still suffered losses after hitting an eight-month low on Friday on its way to its worst month since November 2016. It was the latest at $ 1,750 an ounce, just above a low of around $ 1,716.
Oil prices hiked their rise in the run-up to an OPEC meeting this week where supply could be increased. Brent gained 4.8% and WTI 3.8% last week, both about 20% higher than in February as a whole.
Brent last rose $ 1.11 to $ 65.53, while US crude oil rose $ 1.04 to $ 62.54 a barrel.
Editing by Shri Navaratnam and Lincoln Feast.