Asian stocks hit record highs on Monday as the successful rollout of coronavirus vaccines raised hopes of a swift economic recovery around the world amid new tax aid from Washington, while oil prices rose amid mounting tensions in the Middle East.
MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan rose 0.4 percent to 736.4.
Japan’s Nikkei rose 1.1 percent, hitting the 30,000 mark for the first time since 1990, although the country’s recovery from its worst post-war recession slowed in the fourth quarter.
The Australian benchmark index gained 0.9 percent while the e-mini futures for the S&P 500 rose 0.3 percent in early Asian trading.
Oil prices rose to their highest level since January 2020 in hopes that U.S. stimulus packages will boost the economy and fuel demand, and fears that cold Texas weather could disrupt flows from America’s largest slate field. The Arctic explosion in parts of the US threatens to squeeze shipments from one of the world’s leading producers, just as the crude oil, commodity and stock markets are getting a boost from vaccines and stimulating optimism.
Prices were also buoyant after a Saudi Arabia-led coalition fighting in Yemen said it intercepted an explosives-laden drone fired by the Iranian-facing Houthi group, raising fears of new tensions nearby East woke up.
Brent crude rose $ 1 to $ 63.43 a barrel. US crude rose by $ 1.2 to $ 60.7.
The markets in China and Hong Kong are closed for the New Year holidays. The US stock markets are closed on Monday due to a bank holiday on Presidents’ Day.
The highlight of the week is likely to be the minutes of the January Fed meeting, when policy makers decided to keep rates unchanged.
Inflation data comes from the UK, Canada and Japan, while major economies including the US will release February preliminary purchasing managers’ indexes (PMI) on Friday.
While economists assume that inflation will remain cheap for some time, the so-called “reflation trade” has risen sharply in recent days, mainly due to coronavirus vaccines and hopes of huge budget spending under US President Joe Biden.
Pushing for the first major legislative achievement of his tenure, Biden reached out to a non-partisan group of local officials for help with his $ 1.9 trillion coronavirus aid program.
“We believe that stock markets can continue to do well as long as the rise (in inflation) is gradual. However, unruly movements would certainly hurt investor sentiment, ”said Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions.
“Credit spreads have already tightened a lot, but they still have room to absorb higher returns, which makes us more familiar with credit risk than interest rate risk,” added Dwek.
“Commodities would benefit from an inflation cycle, but they can continue to recover without high core inflation when economies reopen and demand picks up.”
The S&P 500 and Nasdaq hit record highs on Friday. The Dow rose 0.1 percent to 31,458.4 points, the S&P 500 rose 0.5 percent to 3,934.83 and the Nasdaq rose 0.5 percent to 14,095.47.
Market movements in currencies were subdued.
The dollar was slightly higher against the Japanese yen at 105.01, while the euro rose to $ 1.2125 and the British pound rose 0.3 percent to $ 1.3886. The risk-sensitive Australian and New Zealand dollars each rose 0.1 percent.
This left the dollar index – a measure of the US currency against frequently traded peers – stable at 90.426.
Bitcoin was barely changed in early Asian trading at $ 47,994, down from a record high of $ 49,714.66. In a milestone week that was marked by the support of top companies such as Elon Musk’s US electric car manufacturer Tesla, the company recorded growth of around 20 percent.