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Asian markets rise as investors focus on U.S. stimulus

Asian markets rise

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.44%, Australian shares gained 0.62%, Japan’s Nikkei stock index added 0.03%, while shares in China advanced 0.63%

Asian markets edged higher on Wednesday as investors shrugged off worries that stocks may have rallied too fast in the previous year, and focused instead on optimism that more U.S. fiscal stimulus will ignite the global economic recovery.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.44%. Australian shares gained 0.62%, while Japan’s Nikkei stock index added 0.03%. Shares in China advanced 0.63%.

E-mini S&P futures rose 0.23%.

Wall Street had retreated overnight after beginning March with a rally, with the S&P 500 staging its best one-day rally in nine months on Monday.

But some analysts warned that stock prices may be frothy, similar to a fear expressed by a top Chinese regulatory official on Tuesday, which may make it harder for equity markets to hang on to gains. Fears that last week’s sell-off in U.S. Treasuries, which rattled stock markets, could also put a lid on stock prices, they said.

While markets have stabilised, the tone remains tenuous as investors continue to fear a further sell-off in rates, analysts at TD Securities said in a note.

The cautious mood weighed on the U.S. dollar, which has benefited in recent days from investor hopes that the U.S. will enjoy a faster economic recovery, and that the U.S. central bank will be more tolerant of higher bond yields.

The U.S. dollar index was at 90.787, nursing a 0.2% loss from the previous session.

The Australian dollar gained once again, reaching $0.7828 after stronger-than-expected economic growth in the fourth quarter ignited hopes for a V-shaped recovery from the pandemic.

Benchmark U.S. government bond yields dropped again for the third day in a row as investors paused a sell-off ahead of U.S. economic data which is set to be released later this week. The yield on 10-year Treasury notes stood at 1.4085%, down from last week’s high of 1.614%.

The U.S. stock market was roiled last week when benchmark yields spiked to a one-year high as investor bet that a strong U.S. economic rebound amid ultra-loose monetary conditions could fuel inflation.

U.S. Federal Reserve officials have said that inflation concerns are premature, however, and warned that rising yields could tighten financial conditions and constrain an economic recovery.

MSCI’s broadest index of global stocks rose 0.05%.

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