* Asian stock markets: tmsnrt.rs/2zpUAr4
* US stimulus measures increase risk appetite
* Japanese stocks scale the 29-year peak
* Oil futures recover in hope of increased demand
TOKYO / NEW YORK, Dec. 29 (Reuters) – Asian stocks rallied Tuesday, with Japanese stocks hitting a 30-year high as investor risk was encouraged by a Brexit trade deal and hopes that a long-awaited U.S. pandemic relief package will be expanded.
MSCI’s widest index of Asia-Pacific stocks outside Japan rose 0.45%. Australian stocks eventually rose 0.53%. The Japanese Nikkei rose 2.4% to its highest level since August 1990. Shares in China reversed the trend and fell 0.32% on profit taking.
Futures for the S&P 500 contributed 0.4%.
Euro Stoxx 50 futures were up 0.42%, German DAX futures were up 0.53% and FTSE futures gained 1.12% indicating a good start to European trading.
The dollar caused losses against major currencies and government bond yields soared after US President Donald Trump approved a $ 2.3 trillion stimulus package to counter the effects of the coronavirus pandemic.
While the package has yet to pass the Senate, Trump’s approval on Sunday sent shares on Wall Street to record highs on Monday amid heightened optimism about an economic recovery.
“With Brexit … and the US stimulus deal now in the rearview mirror, there is a sense of relief that we have avoided the respective worst-case scenarios,” said Stephen Innes, chief global market strategist at Axi, a broker.
Britain struck a narrow Brexit trade deal with the EU on Thursday, just seven days before it leaves one of the world’s largest trading blocs.
Stronger demand for riskier assets kept the US dollar, often viewed as a “safe haven”, in the background. It fell 0.02% against a basket of major currencies.
Going short to the dollar has been a popular trade of late, and calculations by Reuters based on data released by the Commodity Futures Trading Commission on Monday suggested the trend could continue. Dollar short positions increased to $ 26.6 billion in the week ending December 21, the highest in three months.
Against a basket of six major currencies, the dollar index fell to 90,137, not far from its lowest in more than two years.
The British pound rose to $ 1.3483 following the confirmation last week of a trade deal between the UK and the EU that was widely expected.
A slow dollar supported the gold price, which rose 0.33% to $ 1,877.56 an ounce.
Jack Ma’s Alibaba Group Holding Ltd was up 6.4%, posting six consecutive sessions of declines. Analysts said those gains could be short-lived, as Chinese regulators have called for a shake-up of Ant Group, Alibaba’s mobile payments and consumer finance division.
Analysts also expressed concern that other major Chinese tech companies might receive increased government scrutiny, which could slow investment in the sector.
Oil prices rebounded from an overnight drop amid concerns about increased supply and lower demand amid new COVID-19 travel restrictions around the world.
Brent crude oil rose 0.45% to $ 51.09 a barrel. US crude oil was up 0.48% to $ 47.85 a barrel.
More fiscal stimulus from the US has also allayed concerns about the threat of new variants of the coronavirus identified in Britain and South Africa.
The yield on benchmark 10-year Treasury notes rose to 0.9381%, but the two-year return fell to 0.1270%.
Reporting by Stanley White and Koh Gui Qing; Editing by Sam Holmes, Stephen Coates and Jane Wardell