(May 25): Asian stocks were steady Tuesday after technology shares spurred a Wall Street rally as Federal Reserve officials tried to soothe concerns about inflation. Bitcoin held onto gains following last week’s crypto rout.
Equities in Japan, South Korea and Australia rose modestly at the open. U.S contracts edged up after the S&P 500 climbed and the Nasdaq 100 outperformed amid a jump in Apple Inc. and Tesla Inc. Bitcoin soared in part on Elon Musk’s support for an apparent effort to improve its green credentials.
The Fed comments aided sentiment, as officials reiterated they expect transitory rather than lasting price pressures from the U.S. economic rebound. Ten-year U.S. Treasury yields and the dollar were stable following a retreat.
Oil held an advance after Iran said that gaps remain in negotiations aimed at reaching a deal to end U.S. sanctions on its crude. The Bloomberg Commodity Spot Index advanced the most in about a week.
Fed officials Lael Brainard, Raphael Bostic and James Bullard said they wouldn’t be surprised to see bottlenecks and supply shortages push prices up in coming months as the pandemic recedes, but that much of those gains should be temporary. While market-based measures of inflation expectations have dipped, investors remain cautious about the risk of a pullback in stimulus. They are also monitoring Covid-19 spikes in regions such as Asia.
“Inflation is a key focus for investors, meaning uncertainty over what happens to interest rates,” Chris Iggo, chief investment officer of core investments at AXA Investment Managers, wrote in a note. “Yield curves have stabilized, but it is not clear that renewed inflation concerns automatically mean steeper curves.”
Here are some events this week:
Bank of Indonesia rate decision Tuesday, Reserve Bank of New Zealand policy decision Wednesday, Bank of Korea rate decision Thursday.
CEOs of the largest U.S. banks, including JPMorgan and Goldman Sachs, will testify before lawmakers in the Senate Banking and House Financial Services committees Wednesday.
U.S. initial jobless claims, GDP, durable goods, pending home sales on Thursday.
These are some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 9:20 a.m. in Tokyo. The index added 1%.
Nasdaq 100 contracts rose 0.1%. The gauge added 1.7%
Japan’s Topix index climbed 0.2%
Australia’s S&P/ASX 200 index gained 0.5%
South Korea’s Kospi index climbed 0.5%
Currencies
The Japanese yen was at 108.76 per dollar
The offshore yuan traded at 6.4114 per dollar
The Bloomberg Dollar Spot Index was steady
The euro was at US$1.2218
Bonds
The yield on 10-year Treasuries held at 1.60%
Australia’s 10-year bond yield was steady at 1.69%
Commodities
West Texas Intermediate crude was steady at US$65.92 a barrel
Gold dipped 0.2% to US$1,876.77 an ounce-BLOOMBERG