HONG KONG (Reuters) – Asian stocks rallied on Tuesday, paving the way for global stocks to extend their bull run for a 12th consecutive session, as investors counted on a rollout of coronavirus vaccines to keep the global economic recovery on track.
Oil prices soared to a 13-month high as a deep freeze caused by a severe snowstorm in the United States not only increased demand for electricity but also threatened oil production in Texas.
Rising Asian stocks paved the way for new optimism in world markets.
The S & P500 futures were up 0.5% and the MSCI All Countries in the World (ACWI) Index, which has risen every day so far this month, showed a slight increase.
MSCI’s widest index of Asia-Pacific stocks outside Japan shot up 0.62%, while Japan’s Nikkei rose 1.4% to a 30-year high.
In Hong Kong, the Hang Seng Index rose 1.4% to its 32-month high, while the Australian S & P / ASX200 gained 0.7% in the session. Mainland Chinese markets will remain closed during the holiday season through Thursday.
The positive sentiment also extended to Bitcoin, which was flirting with breaking the $ 50,000 barrier.
Bitcoin traded at $ 49,323.56 during the Asian afternoon session, slightly lower than Sunday’s record of $ 49,715.
Alex Wolf, head of JPMorgan Private Bank’s investment strategy, said the ongoing rollout of the coronavirus vaccine gives investors confidence that global growth will be protected by 2021.
“This is a positive factor that we are entering the process of economic normalization,” said Wolf.
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 outlook on the economy pushed bond yields up, with 10-year US Treasuries up 5 basis points to 1.24% in 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.
Wolf said JPMorgan’s private bank predicted that the U.S. 10-year yield could reach 1.5% by the end of 2021 as investors once again counted on further economic stimulus that could help the global growth outlook.
“An increase in revenues is not a major concern for the rest of the world. It is the rate of increase that matters most from an Asian perspective. If there is a quick price adjustment, it could have a negative effect on emerging markets, ”he said.
US President Joe Biden continues his plan to inject an additional $ 1.9 trillion in stimulus into the economy to further stimulate market sentiment.
US crude oil futures traded 1.1% higher at $ 60.11 a barrel.
Additional reporting by Tomo Uetake in Sydney; Edited by Shri Navaratnam and Richard Pullin