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Asia shares track Wall Street up as inflation fears fade

Berita 24 English -  Asian stocks advanced on Tuesday, tracking Wall Street's rally. At the same time, the dollar remained near a four-m...

Berita 24 English - 
Asian stocks advanced on Tuesday, tracking Wall Street's rally. At the same time, the dollar remained near a four-month low as inflation fears receded following Fed officials' assurances about monetary policy tightening.

Euro Stoxx 50 futures were up 0.27 per cent in early European trade, while German DAX and FTSE futures were up 0.14 per cent and 0.21 per cent, respectively. The S&P 500 e-mini futures in the United States were up 0.27 per cent.

In Asia, the region's major equity gauges advanced, with MSCI's broadest index of Asia-Pacific shares outside Japan rising 1.3 per cent to a two-week high, following a mild gain in US stocks the previous session.

"Markets were buoyed as data failed to support the narrative of high inflation, and despite repeated guidance from senior central bank officials that the current rise in inflation is temporary," ANZ analysts wrote in a note.

Australian stocks increased 0.81 per cent, reaching a two-week high. Japan's Nikkei stock index rose 0.6 per cent, boosted by heavyweight domestic technology stocks. Still, gains were limited by concerns about a sluggish economic recovery due to the country's slow vaccine rollout.

"Generally speaking, when technology stocks rally in the United States, well-known Asian technology stocks follow suit," said Catherine Yeung, investment director at Fidelity International.

Chinese stocks, in particular, rose to a two-and-a-half-month high on the back of gains in financial services and consumer spending. The blue-chip CSI300 index increased by 2.58 per cent, while the benchmark Shanghai Composite Index increased by 2.03 per cent, reaching their highest levels since early March. The Hang Seng index in Hong Kong increased 1.43 per cent.

"As China's economic recovery progresses and commodity prices stabilize, this will help alleviate inflation concerns and rehabilitate investor sentiment," said Hong Hao, head of research at BoCom International. "The country's stock markets also have room to recover from February's precipitous declines."

The 0.24 reading on the US national activity index against expectations of a reading of 1, combined with dovish comments from Federal Reserve speakers, bolstered the view that policy will remain on hold for some time.

Nonetheless, after global service sector surveys indicated robust growth on Friday, all eyes will be on Thursday's release of personal consumption data in the United States, the Fed's preferred inflation gauge.

On Monday, Wall Street closed higher as a decline in benchmark Treasury yields aided the rise of expensive stocks in sectors such as technology, with sector heavyweights Apple and Microsoft both up 1.33 per cent and 2.29 per cent, respectively.

The Dow Jones Industrial Average increased by 0.54 per cent, while the S&P 500 and the technology-heavy Nasdaq Composite increased by 0.99 per cent and 1.41 per cent, respectively.

Treasury yields were little changed on Tuesday after a few Fed officials reaffirmed their support for keeping monetary policy accommodative for an extended period. The 10-year Treasury note yield was 1.6063 per cent, a two-week low.

"While I believe there will come a time when we can discuss changing the parameters of monetary policy, I believe we should refrain from doing so while we are still in the midst of the pandemic," Federal Reserve Bank of St. Louis President James Bullard said on Monday.

Digital currencies recovered on Monday following last week's crypto selloff, regaining ground lost during a weekend selloff triggered by news of China's crackdown on cryptocurrency mining and trading.

Bitcoin, the world's largest cryptocurrency, was last down 1.84 per cent at approximately $38,124, following a 13 per cent loss on Sunday.

The dollar index, which measures the greenback's value against a basket of major trading partners' currencies, edged lower to 89.772, just above a four-month low. The euro was up 0.1 per cent on the day to $1.2225, having gained 1.72 per cent in the previous month.

Crude oil in the United States increased 0.08 per cent to $66.1 a barrel. Brent crude oil prices increased to $68.6 per barrel.

Gold prices were slightly lower. Gold was trading at $1873.64 per ounce on the spot market.

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