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Stock rally extends to Asia amid economic optimism: markets wrap

The dollar retreated.
Image: Michael Nagle/Bloomberg

Asian stocks rose Friday after US shares hit a record on a bipartisan $579 billion US infrastructure deal that stoked economic optimism. The dollar retreated.

Equities gained in Japan, China and Hong Kong. Australian shares weathered the imposition of virus lockdowns in parts of Sydney. S&P 500 and Nasdaq 100 contracts inched up after both indexes reached new peaks. Sectors seen as beneficiaries of the recovery from the pandemic, such as energy, led gains in US hours, and banks rose in postmarket trading after clearing stress tests.

President Joe Biden celebrated the bipartisan plan, which is expected to move through Congress alongside a separate bill that would spend trillions more on what he called “human infrastructure.” It’s not yet assured either measure will get enough wider lawmaker support given the political splits in the US.

The benchmark 10-year US Treasury yield hovered around 1.50%. Investors took the latest comments from Federal Reserve officials in their stride, after the central bank reassured on supportive policy while signaling that the process of removing exceptional stimulus will be gradual.

An MSCI Inc. gauge of global stocks is on course for its best week since April, underpinned by the economic reopening from the health crisis. Risks such as faster inflation, the prospect of tighter monetary policy and more infectious coronavirus variants have yet to sap sentiment materially.

“With the recent Fed commentary, the market’s interpretation has been somewhat confusing,” with a flatter yield curve and more risk-on equities positioning, Catherine Yeung, investment director at Fidelity International, said on Bloomberg TV. “We’re probably in the phase where the Fed and the market itself is just waiting to gather more info about inflation, and whether it’s indeed transitory or more permanent.”

The Mexican peso rallied, spurred by an unexpected central bank interest-rate increase. But the Bank of England pushed back against speculation that a surge in UK inflation heralds higher borrowing costs. The pound held a dip.

West Texas Intermediate crude oil stayed above $73 a barrel. Traders are awaiting upcoming deliberations among OPEC+ producers that may lead to a supply hike. Bitcoin steadied from a swoon earlier in the week.

Here are some events to watch this week:

  • US personal income/spending, University of Michigan sentiment on Friday

These are some of the main moves in markets:

Stocks

  • S&P 500 futures were up 0.1% as of 2:05 p.m. in Tokyo. The index rose 0.6%.
  • Nasdaq 100 futures rose less than 0.1%. The gauge climbed 0.6%
  • Japan’s Topix index gained 0.7%
  • South Korea’s Kospi index was up 0.4%
  • Australia’s S&P/ASX 200 rose 0.5%
  • China’s Shanghai Composite index added 0.9%
  • Hong Kong’s Hang Seng Index climbed 1.2%

Currencies

  • The Bloomberg Dollar Spot Index was steady
  • The euro was little changed at $1.1937
  • The Japanese yen was at 110.87 per dollar
  • The offshore yuan was at 6.4673 per dollar

Bonds

  • The yield on 10-year Treasuries edged up to 1.50%

Commodities

  • West Texas Intermediate crude was up 0.1% at $73.33 a barrel
  • Gold was at $1,776.02 an ounce, up 0.1%
© 2021 Bloomberg

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