HONG KONG, March 11, 2021 (BSS/AFP) – Asian markets ticked higher Thursday
as inflation concerns eased, allowing investors to focus on the global
recovery and progress in fighting the coronavirus pandemic.
Investors were given a positive lead from Wall Street, where the Dow ended
at a new record, helped by news that Joe Biden’s stimulus had cleared its
last hurdle in Congress, as expected, meaning he can sign it into law before
the weekend, pumping almost $2 trillion into the economy.
Fears that a strong rebound in world growth this year will cause a surge in
inflation that forces the Federal Reserve and other central banks to wind
back their ultra-loose monetary policies — including record low interest
rates — have fuelled a sell-off across risk assets in recent months.
But data Wednesday showing US prices rose slightly less than expected in
February soothed those concerns, with the main diver of the increases being
food and energy costs.
That came as a closely watched auction of benchmark US 10-year Treasuries
went off without any problems with the notes selling at a yield broadly in
line with expectations.
Worries about a surge in inflation have lifted US yields to around one-year
highs, while a weak sale of seven-year bonds sparked a stock market sell-off.
Yields rise as prices fall.
“For now there is nothing for the inflationistas to ring the alarm, while
at the same time it provides the Fed plenty of breathing space ahead its
meeting next week,” said National Australia Bank’s Rodrigo Catril.
The inflation data “suggests the music will keep playing for some time,
with the Fed not even close to pondering the option of watering down the
punchbowl”.
He said the consumer price index will naturally jump next month owing to
the low base effect from last year.
Asian markets were positive Thursday, taking their lead from Wall Street,
as well as a third straight record in Frankfurt and a one-year high for
Paris.
Hong Kong, Shanghai and Taipei all rose more than one percent while Seoul
jumped two percent. Tokyo, Singapore, Wellington also rose while Sydney was
flat, though Manila dipped. The healthy US data came as the House of
Representatives passed Biden’s economic rescue package, which will plant up
to $1,400 into struggling Americans’ pockets, expend unemployment benefits,
boost healthcare funding and ramp up vaccine distribution.
Eyes are now on the European Central Bank’s policy meeting later in the
day, which will be followed for its outlook on interest rates and its vast
bond-buying programme as the world economy recovers from last year’s
collapse.
The Fed holds its gathering next week, which Axi’s Stephen Innes said
“could provide a trigger for a renewed selloff in US rates” if policymakers
continue to brush off the rise in bond yields.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.5 percent at 29,179.84 (break)
Hong Kong – Hang Seng: UP 1.4 percent at 29,318.45
Shanghai – Composite: UP 1.7 percent at 3,412.61
Euro/dollar: UP at $1.1934 from $1.1932 at 2220 GMT
Pound/dollar: UP at $1.3939 from $1.3928
Euro/pound: UP at 85.62 pence from 85.60 pence
Dollar/yen: UP at 108.51 yen from 108.38 yen
West Texas Intermediate: UP 0.8 percent at $64.93 per barrel
Brent North Sea crude: UP 0.7 percent at $68.40 per barrel
New York – Dow: UP 1.5 percent at 32,297.02 (close)
London – FTSE 100: DOWN 0.1 percent at 6,725.60 (close)