Asian shares advance as yields, inflation fears moderate

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March 11, 2021 1:37 PM

Banks were among the biggest gainers. JPMorgan rose 2.2 per cent, Bank of America gained 2.9 per cent and Citigroup climbed 3.9 per cent. More than 75 per cent of companies in the S&P 500 notched gains.

Technology stocks lagged the broader market. Apple fell 0.9 per cent and Microsoft slid 0.6 per cent.

Stocks climbed in Asia on Thursday after a key measure of inflation in the US came in lower than expected, easing worries that price pressures could push interest rates higher.

Shares rose in Tokyo, Shanghai and Hong Kong but were flat in Sydney.

On Wall Street, energy and financial stocks rose while Big Tech shares declined. The S&P 500 added 0.6 per cent and the Dow Jones Industrial Average hit a record high, though tech stocks pulled the Nasdaq slightly lower.

The Labour Department reported that US consumer prices, a key measure of inflation at the consumer level, rose 0.4 per cent in February, the biggest gain in six months, led by a jump in gasoline prices.

But core inflation, excluding food and energy, posted a much smaller 0.1 per cent gain, easing fears that the inflation might surge as the economy recovers from the pandemic.

The timing could not have been better, Stephen Innes of Axi said in a commentary.

“As Biden’s . . . USD 1.9 trillion fiscal stimulus plan was passed by the House, CPI data revealing softer sequential core pressures were there to greet and subdue fears of runaway inflation,” Innes said.

“Upshot being, US inflation data appears to have bought some space for, and lent credence to, prolonged and unwavering stimulus.”

Treasury yields fell broadly following the report, including the benchmark 10-year Treasury note, which influences interest rates on mortgages and other consumer loans.

The yield on the 10-year Treasury note was steady at 1.52 per cent on Thursday after rising as high as 1.60 per cent late last week.

Bond yields have risen in the past month. The fall in bond prices, which are inversely related to yields, attracted investors reluctant to pay high prices for stocks, especially tech stocks that looked most expensive.

Tokyo’s Nikkei 225 index gained 0.6 per cent to 29,211.64 and the Hang Seng in Hong Kong added 1.1 per cent to 29,230.97. South Korea’s Kospi surged 1.9% to 3,019.72, buoyed by a 1 per cent rise in shares in Samsung Electronics, the biggest listed company. In Australia, the S&P/ASX 200 was almost unchanged at 6,713.90.

The Shanghai Composite index jumped 1.8 per cent to 3,417.38 as Chinese leaders prepared to wrap up the annual session of the largely ceremonial legislature.

In New York, the S&P 500 rose 23.37 points to 3,898.81. The Dow gained 1.5 per cent to a record 32,297.02, thanks partly to a 6.4 per cent jump in Boeing. The Dow’s previous all-time high was about two weeks ago.

The Nasdaq slipped less than 0.1 per cent to 13,068.83, taking it about 7.3 per cent below the all-time high it reached on February 12.

Traders also bid up shares in smaller companies, extending the Russell 2000’s winning streak to a fourth day. The index picked up 1.8 per cent, to 2,285.68.

Investors are also betting the latest USD 1.9 trillion in government stimulus will help lift the US economy out of its coronavirus-induced malaise.

The House approved the sweeping pandemic relief package over Republican opposition on Wednesday, sending it to President Joe Biden to be signed into law. The package would provide USD 1,400 checks for most Americans and direct billions of dollars to schools, state and local governments, and businesses.

Banks were among the biggest gainers. JPMorgan rose 2.2 per cent, Bank of America gained 2.9 per cent and Citigroup climbed 3.9 per cent. More than 75 per cent of companies in the S&P 500 notched gains.

Technology stocks lagged the broader market. Apple fell 0.9 per cent and Microsoft slid 0.6 per cent.

In other trading, US benchmark crude oil gained 45 cents to USD 64.89 per barrel in electronic trading on the New York Mercantile Exchange.

It picked up 43 cents to USD 64.44 per barrel on Wednesday. Brent crude, the international standard, gained 43 cents to USD 68.34 per barrel.

The US dollar was at 108.76 Japanese yen, up from 108.41 yen on Wednesday. The euro fell to USD 1.1925 from USD 1.1928.

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