Asian equities, commodities gain on economic recovery in trade

    TOKYO / NEW YORK (Reuters) – Asian stocks rose Wednesday, monitoring Wall Street’s modest gains as expectations that a vaccine will ultimately win the coronavirus battle fueled hopes for recovery, while tight supply expectations they pushed oil prices to one-year highs.

    MSCI’s broader index of Asia Pacific stocks outside of Japan rose 0.61%, while Japan’s Nikkei 225 was up 1.12%.

    Chinese equities were up 0.07% while South Korea’s KOSPI gained 1.05%. Australia’s S & P / ASX 200 reversed losses and added 0.18%.

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    US stock futures were up 0.18%.

    Treasuries extended their rally, pushing 10-year benchmark yields further away from the highest in nearly a year and caused a slight flattening of the yield curve.

    Euro Stoxx 50 futures fell 0.03%, German DAX futures rose 0.03%, and Britain’s FTSE futures rose 0.18%, indicating a moderate start to European trading.

    Investors are betting that the upcoming Biden administration would increase U.S. distribution of coronavirus vaccines and spend a lot on additional stimulus, which will contribute to a global economic recovery and increased demand for commodities, analysts say.

    Hugh Young, Head of Asia Pacific at Aberdeen Standard Investments, said he expects investor interest in Asia seen in the second half of 2020 to be sustained this year.

    “The eternal question is overestimation. The Asian markets have done very well, which is a bit frustrating, but certainly the quality is in Asia, the momentum is in Asia, so it looks to be a stable year and a good year for Asia, “said Young. in a panel at Reuters Next conference.

    On Wall Street, stocks fluctuated almost unchanged for the session not far off from record. The Dow was up 0.19%, the S&P 500 was up 0.04%, and the Nasdaq Composite was up 0.28%.

    US West Texas Intermediate (WTI) rose 1.13% to $ 53.81 a barrel, hitting a high since February after a larger-than-expected decline in US crude oil inventories. Brent crude is up 1.27% to $ 57.30. [API/S]

    Oil prices were also sustained after Saudi Arabia said it wanted to cut production by one million more barrels per day in February and March.

    Some investors were monitoring developments in Washington after at least three Republicans said they would join the Democrats in a vote scheduled for Wednesday to impeach President Donald Trump for the recent riots on the US Capitol.

    With seven days remaining in his term, Trump faces impeachment on charges of inciting insurgency in a speech to his followers last week before hundreds of them stormed the Capitol, leaving five dead. Trump says his speech was appropriate.

    An impeachment process could proceed even after Trump leaves office on January 20, but analysts say they don’t expect further political turmoil in Washington to affect markets.

    “The markets since the election have been quite strong because the uncertainty factor has been removed,” said Peter Essele, head of portfolio management at Boston’s Commonwealth Financial Network.

    Yields on 10-year benchmark US government debt fell to 1.1240% on Wednesday, down from an almost one-year high of 1.1870% reached in the previous session after a well-received auction of new 10-year banknotes.

    The yield curve, which had peaked since May 2017 based on expectations of strong fiscal stimulus under a new Democratic administration, narrowed slightly to 97.5 basis points.

    The dollar fueled losses Wednesday as falling US yields stifled its recent rebound.

    Against the yen, the greenback fell 0.12% to 103.65. The dollar also fell to $ 1.3683 against the British pound.

    Safe haven spot gold added 0.2% to $ 1,860.13 per ounce.

    Reportage by Stanley White in Tokyo and Chibuike Oguh in New York; Editing by Sam Holmes, Ana Nicolaci da Costa and Kim Coghill

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