Asia’s stock rally to build; bond yields climb

Asia’s stock rally to build; bond yields climb
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SYDNEY (Feb 5): The rally in risk assets is set to gather pace Wednesday with stock futures in Asia climbing following a strong session for U.S. equities. Treasuries sank amid speculation the global economy can weather the impact of the coronavirus.

Australian shares rose as trading began and futures in Japan and Hong Kong pointed higher, indicating a second day of gains for Asian shares. Earlier, the S&P 500 Index soared the most since August, by 1.5%. The Nasdaq 100 hit an all-time high, with U.S. technology stocks now having recovered all the losses
sustained in the recent virus-related sell-off. European and emerging-market equities also rallied. The offshore yuan retained its gains from Tuesday, when haven assets from Treasuries to the yen and gold all retreated. Australia’s 10-year bond yield rose back to 1%.

While investors continue to struggle assessing the economic impact of the deadly coronavirus, some are taking solace from intervention by Chinese authorities to provide support to its financial system. The risk to growth remains, with travel restrictions in place and Macau shutting its casinos for another two weeks. Meantime, earnings continue to roll in.

“These type of dislocations tend to be short-lived, and do tend to produce very good entry points and buying opportunities,” Lisa Shalett, chief investment officer for wealth management at Morgan Stanley, told Bloomberg TV.

Elsewhere, West Texas crude oil closed below $50 a barrel for the first time in a year amid concern the coronavirus will crimp demand.

In the 2020 U.S. presidential election race, Pete Buttigieg was leading narrowly in long-delayed, and partial, results in the Iowa caucuses Tuesday.

Here are some key events coming up:

* Euro-zone PMI data in its final version will be released Wednesday.

* The Reserve Bank of India’s interest rate decision is due Thursday.

* The U.S. employment report for January is set for Friday release.

These are the main moves in markets:

Stocks

* Australia’s S&P/ASX 200 Index climbed 0.7% as of 10:08 a.m. in Sydney.

* Futures on Japan’s Nikkei 225 added 1.2% in Singapore.

* Hang Seng Index futures earlier gained 0.5%.

* Futures on the S&P 500 were flat. The S&P 500 jumped 1.5% in New York on Tuesday and the Nasdaq 100 added 2.3%.

Currencies

* The yen was at 109.47 per dollar after sliding 0.8% Tuesday.

* The offshore yuan was at 6.9924 per dollar.

* The euro bought $1.1046, little changed.

Bonds

* The yield on 10-year Treasuries gained seven basis points to 1.60% Tuesday.

* Australia’s 10-year yield rose about eight basis points to 1% Wednesday.

Commodities

* West Texas Intermediate crude dipped to $49.57 a barrel.

* Gold was steady at $1,553.21 an ounce after sliding 1.5% Tuesday.