LONDON (Reuters) – Investors shrugged off the second impeachment of U.S. President Donald Trump and focused on reports on Thursday that his replacement, Joe Biden, would drop a stimulus program. New $ 2 trillion later
Hopes for the increased packages have raised most of the major stock markets. Japan’s Nikkei hit its highest in three decades in Asia. [.T] And Europe opened up 0.4% as traders there ignored the prospect of another collapse of the Italian government. [.EU]
In the bond market there is another signal to sell.
The 10-year US Treasury yield, the benchmark for global borrowing costs, rose two points to 1.11% as traders consider a $ 2 trillion biden COVID-2 assistance package that raised U.S. debt levels. Go again
European yields, pegged with the region’s tighter COVID shutdown, further bolster bets of European Central Bank bond purchases But the gauge of inflation expectations is rising.
Luca Paolini, head of strategy at Pictet Asset Management, said the steady increase in borrowing rates could destabilize markets if they start to accelerate.
“It might be a bit difficult,” he said, “although I would like to have the Fed’s hike. (Federal Reserve), but bond yields are 4%, growth at 5% instead of zero, because it’s more sustainable. ”
For a graphic on the US inflation forecast in the euro:
There was a lot of action in Asia overnight too.
Japan’s Nikkei hit its highest since August 1990, surging 25 percent since late October. [.T]
Chinese data showed more than expected exports in December, suggesting strong global demand, while machinery orders rose for a second straight month in Japan.
China’s blue chips eased from a 13-year high on Wednesday as investors took some profits. [.SS] Although it doesn’t tell the whole story
Hong Kong-listed shares of Chinese tech giants Alibaba and Tencent and Baidu are all on the rise after sources told Reuters and the Wall Street Journal that it plans to expand the U.S. investment ban. Also such shares
Alibaba and Tencent alone are valued at more than $ 1.3 trillion and are two-thirds largest emerging market shares in the world, accounting for 10% of the widely followed MSCI emerging market share index. [.MSCIEF]
“I think the market is relieved,” said China equity portfolio manager at William Blair Investment Management Vivian Lin Thurston.
“However, concerns about this risk and the volatility of these stocks may continue for the foreseeable future until China’s biden strategy is clear.”
In commodities, oil futures make little losses as rising coronavirus cases raise concerns about greater shutdowns and lower energy demand.
Brent crude futures were down 0.5 percent at $ 55.75 a barrel and U.S. crude futures were $ 52.70.
Gold, hit by U.S. yields, traded 0.2 percent lower at $ 1,840 an ounce, well below its two-month high of $ 1,959 last week. [GOL/]
Biden is scheduled to outline his economic plan on Thursday, and Federal Reserve Chairman Jerome Powell will also speak, potentially raising returns again.
“The number one question for global equities and markets is when the Fed will start downsizing,” said Frank Ben Zimra, head of Asia Shareholding Strategy at Societe General in Hong Kong.
“This is where you will be concerned … but at the moment it’s a little premature.”
The currency markets are taking a bit more of a wait-and-see approach as investors short on the dollar and wonder if the eventual decline might limit the dollar’s decline.[FRX/]
The dollar rose 0.2 percent to 104.12 yen.The global recovery-sensitive Australian and New Zealand dollars rose to $ 0.7761 and $ 0.7203 respectively, while the euro posted a small loss of $ 1.2151 and 126.42 yen.
“The new election (in Italy) is still a lot of outside gambling. But it looks like we’ve gotten into our 132nd Italian government over the past 160 years, ”said Deutsche Bank economist Jim Reid.
Additional reporting by Dhara Ranasinghe in London and Tom Westbrook in Singapore; Editing by Simon Cameron-Moore.