By Tom Westbrook
SINGAPORE, Apr 6 (Reuters) – Stocks were approaching record highs on Tuesday, buoyed by good economic data from China and the United States, as currency and bond markets took a breather after a month in which the dollar and Treasury yields have soared.
The European equity benchmark STOXX 600 hit an all-time high on Tuesday, recouping all its losses from the pandemic, as investors are betting on a rapid global economic recovery, spurred by large spending on stimulus and vaccination programs. against COVID-19.
Global equities briefly hit an all-time high in Asia, as 1% gains in the technology-heavy Taiwan market and the Australian banking and mining exchange added to the gains on Wall Street.
The profit-taking sent the Japanese Nikkei down 1% and dragged the Shanghai Composite with it, although European futures rallied ahead of the first trading session after Easter.
FTSE and EuroSTOXX 50 futures were up 0.8%. The S&P 500 closed Monday at an all-time high and futures were down 0.2% Tuesday.
Following the good results on US employment on Good Friday, data for March showed that services activity has registered a record. China’s services sector has also gained momentum with the biggest increase in sales in three months.
“Taken together, it’s good for the global economy and therefore offers a reason to enter more cycle-sensitive currency pairs and to buy stocks in general,” said Kyle Rodda, market analyst at IG brokerage in Melbourne. .
“Yields haven’t moved much, so tech stocks have outperformed,” he said.
The 10-year benchmark US Treasury yield was down 1.7 basis points to 1.6897%, while the US dollar largely missed the big rebound in strong data and held on at $ 1.1810 per euro after posting its biggest drop in several weeks.
On the other hand, Credit Suisse tried to reduce its exposure to the collapse of the hedge fund Archegos Capital, announcing that the debacle will cost it about 4.7 billion dollars and the dismissal of two top executives.
The stabilization of Treasury and greenback yields follows an onslaught in the first quarter, with a rise of 83 basis points in 10-year yields, the largest quarterly rise in a dozen years, and a rise 3.6% in the dollar index, the steepest since 2018.
“Now the bonds have stabilized,” said Omkar Joshi, a portfolio manager at Opal Capital Management in Sydney, after a sharp and steep decline. “I think the markets can keep moving from here.”
The minutes of the March meeting of the US Federal Reserve, to be released on Wednesday, are the next focus of attention for the bond markets, although they will not address the surprises of the latest data and the markets are far ahead of schedule. the Fed’s projections for low rate years.
Fed fund futures have discounted a rise for next year, while Eurodollar markets forecast it between now and December.
“What needs to be seen is how the Fed strengthens and secures its flexible median inflation targeting strategy,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.
“The movement of the dollar in recent weeks reflects that the markets are advancing despite what the Fed has said,” he added.
Currencies were fairly quiet throughout the Asian session, retaining small gains against the dollar. The Australian dollar was trading at $ 0.7647 after the central bank decided to stick with monetary policy as expected.
The Japanese yen lost a bit of ground to stand at 110.21 per dollar, while the British pound hit a two-and-a-half-week high of $ 1.3919.
The fall in the dollar helped oil prices to recover some of the losses suffered on Monday on concerns that a new wave of coronavirus infections in Europe and India could reduce energy demand.
Brent crude futures were up 0.6% at $ 62.53 a barrel, while US crude was up 0.8% at $ 59.11 a barrel. Gold was down 0.5% to $ 1,737 an ounce. [GOL/]
(Information from Tom Westbrook in Singapore; additional information from Chibuike Oguh in New York; edited by Shri Navaratnam and Jacqueline Wong; translated by Flora Gómez at the Gdansk newsroom)