(March 2): Asian stocks extended a global equity rally Tuesday as investors shook off concerns about the impact of higher bond yields. Treasuries were steady.
Stocks saw modest gains in Japan and Australia, and surged in South Korea which reopened after a holiday. S&P 500 futures ticked higher following a broad-based rally in U.S. equities overnight. Earlier, the U.S. benchmark notched its biggest advance in almost nine months and the Nasdaq Composite jumped almost 3%. Benchmark Treasury yields were little changed after ticking higher Monday. The dollar was steady against most major peers.
Oil slipped back to trade around the $60 a barrel level ahead of a key OPEC+ meeting this week that may return more supply back to the market. After the close of regular trading, Zoom Video Communications Inc. rose as its revenue forecast topped Wall Street’s estimates.
Investors piled back into risk assets following a selloff triggered by concern that massive stimulus as well as progress in battling the coronavirus have left some areas of the economy at risk of possibly overheating. Traders are priming themselves for how Federal Reserve officials slated to speak this week might respond to the recent tumult in bond markets.
“There’s nothing wrong with longer term interest rates where they are; financial conditions broadly are still fairly easy,” said Julia Coronado, founder of MacroPolicy Perspectives LLC. “Given the stabilization we’ve seen since Thursday, the Fed can breathe a sigh of relief.”
On the virus front, while cases are falling and vaccinations are accelerating, health officials are closely monitoring new variants of the virus and World Health Organization Officials warned for a rebound in infections as countries ease restrictions.
Elsewhere, Bitcoin rallied after a volatile weekend session, riding a broad resurgence in risk assets and a bullish report from Citigroup Inc. The bank’s strategists laid out a case for the digital asset to play a bigger role in the global financial system, saying the cryptocurrency could become “the currency of choice for international trade” in the years ahead.
There are some key events to watch this week:
- U.S. Federal Reserve Beige Book is due Wednesday.
- OPEC+ meeting on output Thursday.
- U.S. factory orders, initial jobless claims and durable goods orders are due Thursday.
- The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.
These are some of the main moves in markets:
- S&P 500 futures rose 0.2% as of 9:05 a.m. in Tokyo. The S&P 500 Index surged 2.4%.
- Topix index rose 0.5%.
- Australia’s S&P/ASX 200 Index gained 0.8%.
- South Korea’s Kospi index rose 2.6%.
- The yen traded at 106.81 per dollar.
- The offshore yuan was at 6.4646 per dollar.
- The Bloomberg Dollar Spot Index decreased 0.1%.
- The euro was at US$1.2048.
- The yield on 10-year Treasuries held at 1.42%.
- Australia’s 10-year bond yield was steady at 1.67%.
- West Texas Intermediate crude declined 1% to US$60.05 a barrel.
- Gold was little changed at US$1,724.56 an ounce.