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GLOBAL MARKETS-Asia stocks near highs, yields up on U.S. stimulus risk

Stock Markets Jan 11, 2021 05:48
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© Reuters.

* Asian stock markets :
* Asia index off all-time top, Japan on holiday
* Biden to announce new stimulus plans this week
* Treasury yields highest since March on reflation trade
* Oil prices near 11-month peak amid supply curbs

By Wayne Cole
SYDNEY, Jan 11 (Reuters) - Asian shares paused near historic
highs on Monday while Treasury yields were at a 10-month top as
"trillions" in new U.S. fiscal stimulus plans were set to be
unveiled this week, stoking a global reflation trade.
Investors were keeping a wary eye on U.S. politics as
pressure grew to impeach President Donald Trump, though signs
were an actual trial could be some time away. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS dipped 0.2%, having surged 5% last week to
record highs. Japan's Nikkei .N225 was on holiday after
closing at a 30-year high on Friday.
South Korea .KS11 reversed an early jump to fall 1.5%, and
Chinese blue chips .CSI300 were steady.
"Asia has come through the second global crisis this
millennium with its credentials," said ANZ chief economist
Richard Yetsenga.
"Asia's growth is stronger, with for the most part better
demographics and debt levels, than advanced economies."
He noted a turnaround in fortunes between the semiconductor
and energy sectors highlighted Asia's success, given the region
produced around 45% of the world's semiconductors.
"For the first time the global semiconductor sector's market
capitalisation has surpassed energy," he said. "At the time of
the last crisis, 12 years ago, the energy sector was more than
five times larger."
Futures for the S&P 500 ESc1 slipped 0.6% from all-time
peaks, after gaining 1.8% last week. EUROSTOXX 50 futures
STXEc1 eased 0.1% and FTSE futures FFIc1 were flat.
Longer-term Treasury yields were at their highest since
March after Friday's weak jobs report only fanned speculation of
more U.S. fiscal stimulus now that the Democrats have control of
the government. President-elect Joe Biden is due to announce plans for
"trillions" in new relief bills this week, much of which will be
paid for by increased borrowing. At the same time, the Federal Reserve is sounding content to
put the onus on fiscal policy with Vice Chair Richard Clarida
saying there would be no change soon to the $120 billion of debt
the Fed is buying each month.
With the Fed reluctant to purchase more longer-dated bonds,
10-year Treasury yields US10YT=RR jumped almost 20 basis
points last week to 1.12%, the biggest weekly rise since June.
Treasury futures TYc1 lost another 3 ticks early Monday.
Mark Cabana at BofA warned stimulus could further pressure
the dollar and cause Fed tapering to begin later this year.
"An early Fed taper creates upside risks to our year-end
1.5% 10-year Treasury target and supports our longer-term
expectations for neutral rates moving towards 3%," he said in a
note to clients.
The poor payrolls report will heighten interest in U.S. data
on inflation, retail sales and consumer sentiment.
Earnings will also be in focus as JP Morgan JPM.N ,
Citigroup C.N and Wells Fargo WFC.N are among the first
companies to release fourth-quarter results on Jan. 15.
The climb in yields in turn offered some support to the
down-trodden dollar, which had edged up to 90.439 =USD against
a basket of currencies from last week's low of 89.206.
The euro pulled back to $1.2170 EUR= from a recent top of
$1.2349, breaking support around $1.2190. The dollar also firmed
to 104.18 yen JPY= from a trough of 102.57 hit last week.
The sudden lift in bond yields undermined gold, which pays
no interest, and the metal fell back 1.1% to $1,828 an ounce
XAU= from its recent peak of $1,959. GOL/
Oil prices ran into profit taking after reaching their
highest in nearly a year on Friday, gaining 8% on the week after
Saudi Arabia pledged to cut output. O/R
Brent crude LCOc1 futures dipped 65 cents to $55.34, while
U.S. crude futures CLc1 lost 41 cents to $51.83 a barrel.

Asia stock markets
Asia-Pacific valuations
(Editing by Sam Holmes)

GLOBAL MARKETS-Asia stocks near highs, yields up on U.S. stimulus risk

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