asia

GLOBAL MARKETS-Asia sets up global stocks for extended bull run on economic optimism


* MSCI ACWI has risen every single day so far in Feb

* Hong Kong shares hit 32 month high Nikkei up 0.5%,

* Oil rally fuelled by winter storm in Texas

* World FX rates http://tmsnrt.rs/2egbfVh(Adds analyst commentary and Hong Kong open)

By Hideyuki Sano

TOKYO, Feb 16 (Reuters) – Asian shares advanced on Tuesday,putting world equities on course to extend their bull run for a12th consecutive session as optimism about the global economicrecovery and expectations of low interest rates driveinvestments into riskier assets.

Oil prices soared to a 13-month high as a deep freeze due toa severe snow storm in the United States not only boosted powerdemand but also threatened oil production in Texas.

MSCI’s broadest index of Asia-Pacific shares outside Japanticked up 0.45% while Japan’s Nikkeirose 0.4% to a 30-year high.

In Hong Kong, the Hang Seng Index surged 1.79% to hita 32-month high in its first trading session since Thursdayfollowing the Lunar New Year holidays.

Mainland Chinese markets will remain closed for the holidaysuntil Thursday while Wall Street was also shut on Monday.

Ord Minnett advisor John Milroy said while share marketswere positive investors were becoming wary of the future risk ofinflation due to central bank and government stimulus programmesin place around the world.”There is a clear sense with rates staying low for some timeyet and investor appetite for equities staying strong we willlikely see markets hold up for some time yet,” Milroy toldReuters.

“Gaining traction is the thought that inflation could risemuch faster and sooner than the Fed is currently thinking. Thenif they do raise rates to combat it what happens to equitymarkets and of course bond markets.”

The bullish view on the economy lifted bond yields, with the10-year U.S. Treasuries gaining 5 basis points to 1.245%in early Asian trade, its highest since late March.

Investors are looking to the minutes from the U.S. FederalReserve’s January meeting, due to be published on Wednesday, forconfirmation of its commitment to maintain its dovish policystance over the near future. That in turn is set to keep a tabon bond yields.

But some analysts say investors should keep a wary eye onbond yields.

“If U.S. bond yields keep rising, that could start tounsettle stocks,” said Masahiro Ichikawa, chief strategist atSumitomo Mitsui DS Asset Management.

S&P500 futures traded 0.65% higher to a record leveland MSCI’s all country world index (ACWI), which has risen everysingle day so far this month, ticked up slightly.

Successful rollouts of COVID-19 vaccines in many countriesare raising hopes of further recovery in economic activitieshampered by range of anti-virus curbs.

U.S. President Joe Biden is pushing ahead with his plan topump an extra $1.9 trillion in stimulus into the economy, in afurther boost to market sentiment.

Oil prices soared to their highest in about 13 months as aU.S. winter storm added fuel to their rally on hopes of furtherdemand recovery.

U.S. crude futures traded up 1.1% at $60.11 perbarrel.

Prices have rallied over recent weeks on tighteningsupplies, largely due to production cuts from the Organizationof the Petroleum Exporting Countries (OPEC) and allied producersin the wider OPEC+ group of producers.

Rising oil prices supported commodity-linked currencies suchas the Canadian dollar while safe-haven currenciesincluding the U.S. dollar took a back seat.

The British pound held firm at $1.3910, staying atits highest levels since April 2018.

The offshore Chinese yuan hit a 2-1/2-year high of 6.4010per dollar overnight and last stood at 6.4030.

MSCI’s emerging market currency index hit arecord high as well.

The yen weakened to 105.36 per dollar, edging closerto its four-month low of 105.765 set on Feb. 5. while the eurowas up 0.1% at $1.2142.

In Asia, Bitcoin was trading at $48,088.28, offits record high of $49,715 hit on Sunday.

(Additional reporting by Tomo Uetake in SydneyEditing by Shri Navaratnam)



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