HONG KONG: Asian markets surged on Thursday on the confidence inflation is a manageable risk and the passage of the $1.9 trillion US stimulus package would supercharge the economic recovery.
“Once volatility in US yields subside and bond fund flows stabilise, credit markets may return their focus back to a positive outlook for earnings, and an incipient V-shaped global rebound fuelled by vaccines and fiscal stimulus,” said DBS strategists Chang Wei Liang and Philip Wee.
“The credit cycle remains fundamentally underpinned by an upturn in the economic cycle, absent any major reversal in US monetary policy settings.”
US Treasuries added to their gains following mild inflation data from the world’s biggest economy and moderating prices of iron ore and copper.
The 10-year yields fell 3 basis points to 1.48% and the dollar eased 0.3% to 91.5 against a basket of currencies. But gold rose 0.7% to $1,739 per ounce leveraging off a softer dollar.
Japan’s Nikkei 225 index added 0.60%, Hong Kong’s Hang Seng index jumped 1.65%, China’s CSI300 advanced 2.49% but Australia’s S&P ASX 200 ended flat, underperforming the region, as copper prices were down 7.6% from their recent peak, and iron ore down 12.4%. Regionally, the MSCI Asia Pacific index 0.53%.
Still analysts are asking investors to be watchful about inflation as oil extended gains and prices of metals likely to rise. West Texas Intermediate crude rose 0.8% to $65.16 a barrel and Copper climbed above $9,000 a ton in London after the recent slide.
“Although this month’s US CPI print does not suggest an acceleration in prices, it also does not refute the argument that an inflationary spike is imminent,” said BCA Research economists in a note.
“Commodity prices will likely remain well bid despite China’s policy tightening thanks to supply tightness and strong demand in the rest of the world.”
- Japan’s Nikkei 225 index added 0.60%
- Australia’s S&P ASX 200 ended flat
- Hong Kong’s Hang Seng index jumped 1.65%
- China’s CSI300 advanced 2.49%
- The MSCI Asia Pacific index 0.53%.
Stock of the day
China Hongqiao shares rose as much as 2.2% after it unveiled plans to raise HK$2.3 billion via issue of shares at a premium of 10%.