Asian stocks soar to two-month highs on solid data

Thursday, 3 March 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Asian shares rallied to two-month highs on Wednesday as overnight gains in oil prices and a swath of positive economic data from Australia to the United States calmed fears of a global economic slowdown.

Stock markets across the region were in the black, led by Japan and Hong Kong, with announcements from China this week of a cut in bank reserve requirements and structural reforms helping underpin sentiment.

The Nikkei was up 4% and Hong Kong’s Hang Seng Index by 2.6%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2% to its highest levels since 7 January, and building on gains in the previous session.

MSCI’s broadest gauge of the world’s stock markets also rose to highest level in almost two months.

Even in credit markets, where high yield debt has been dumped by investors on worries of growing bankruptcies, an index (HYG) measuring its performance has bounced by 7% since mid-February.

Investors unwound bets in safe-haven assets such as government bonds, with the 10-year US Treasuries yield rising to 1.85% on Tuesday from 1.740% the previous day.

The policy-rate sensitive two-year yield rose to 0.847% from 0.789%.

US interest rate futures are pricing in the Fed funds rate of 0.65% in January, effectively pricing in a full chance of a rate hike this year.

As the prospects of higher US rates burnished the dollar’s yield attraction, the dollar’s index against a basket of six major currencies briefly rose to a one-month high.

Against the yen, the dollar rose to 114.05 yen, recovering further from its double-bottom near 111 hit last month.

The euro hit a one-month low of $1.08340 on Tuesday, staying under pressure as investors expect the European Central Bank to step up monetary stimulus at its policy meeting next week. It last stood at $1.08635.