By Andrew Galbraith
SHANGHAI (Reuters) – Asian stocks and US Treasury yields rose on Wednesday, recouping some of the week’s losses as investors reassessed economic concerns, but the dollar was firm on concerns about the impact of a rapidly spreading variant of coronavirus.
The rise in COVID-19 infections rocked global markets this week as investors emptied their risky assets, seeking stability in safe-haven assets like bonds. That sent stocks tumbling down and pushed the US 10-year benchmark yield to its lowest level in five months on Tuesday.
But on Wednesday, MSCI’s largest Asia-Pacific stock index outside of Japan rose 0.17%, cutting its losses for the week to around 2%, while Japan’s Nikkei rose by 0.90% after hitting a six-month low the day before.
Sentiment in Japan was supported by an increase in exports in June, driven by US demand for cars and shipments of chip-making equipment to China, raising hopes of an export-led recovery.
Australian stocks rose 1.21%, Chinese blue chips added 0.76% and Taiwanese stocks rose 0.27%.
Seoul’s KOSPI slipped 0.14% as South Korea reported a daily record for new coronavirus cases.
“The volume level, the sporadic level of jigsaw price action, I think, tells you that there isn’t a lot of conviction one way or another,” Kay Van said. -Petersen, Global Macro Strategist at Saxo Capital Markets in Singapore.
But while he said the peak in global growth has likely passed, accommodative central bank policies continue to strongly support global asset prices, even as they begin to signal declining asset purchases.
“The balance sheets of the G4 central banks have grown 15% since 2008. And what I’m saying is it’s not going to stop. It’s not going to stop.”
On Tuesday, the Dow Jones Industrial Average rose 1.62% to 34,511.99 points, the S&P 500 gained 1.52% to 4,323.06 and the Nasdaq Composite added 1.57% to 14,498.88 .
The rise in Asian equity market indices on Wednesday was accompanied by lower prices for US Treasuries, with the 10-year yield reaching 1.2202% from the previous day’s close of 1.209%. The 2-year yield was 0.2036%, compared to a close of 0.194%.
But underlining lingering concerns about the impact of a surge in global COVID-19 infections, the dollar remained near three-month highs on Wednesday.
“While one part of the world ignores the increase in infections as vaccination rates limit the severity of any symptom of new cases, there are few parts of the world that can totally ignore it,” said Rob Carnell , Asia-Pacific Chief Economist at ING.
The dollar index edged up 0.07% to 93.030, with the euro down 0.07% to $ 1.1771. The dollar strengthened 0.05% against the yen to 109.90.
Oil prices began to fall again after a rebound on Tuesday, with US crude down 0.4% to $ 66.93 a barrel and Brent at $ 69.12, down 0.33% on the day.
Spot gold fell 0.21% to $ 1,806.24 an ounce.
(Reporting by Andrew Galbraith, editing by Christopher Cushing)