(May 28): Asian stocks look set to rise Friday after solid U.S. economic data and President Joe Biden’s federal spending plans spurred a rally on Wall Street in cyclical shares. Treasury yields climbed.
Futures pointed higher in Japan and Australia and were steady in Hong Kong. U.S. equity contracts climbed after industrial and financial shares helped the S&P 500 to a small gain. Small-caps outperformed and the tech-heavy Nasdaq 100 slipped. U.S. data prints included a drop in jobless claims to a fresh pandemic low. Meanwhile, Biden is reportedly set to unveil a budget that would take federal spending to US$6 trillion in the coming fiscal year.
The 10-year U.S. Treasury yield advanced past 1.6% amid the growth optimism and focus on debt supply risks to fund spending. A gauge of the dollar was steady and the yen held a decline amid month-end rebalancing. The yuan is in focus after China’s central bank said the exchange rate can’t be used as a tool to spur exports or to offset the impact of commodity price surges.
Global stocks are set to climb for a fourth month. The economic rebound from Covid-19 is a bulwark for sentiment, and comments from Federal Reserve officials have helped temper fears that inflation could spark a faster-than-expected reduction in stimulus. Treasury Secretary Janet Yellen said she sees the burst in prices as temporary, though likely to last through the end of 2021.
Economic data are underscoring the recovery trade, and “value has a much stronger path for gains going forward,” said Greg Bassuk, chief executive officer at AXS Investments.
Elsewhere, oil climbed to a more than two-year peak and the Bloomberg Commodity Spot Index rose the most in about two weeks. Bitcoin continued to trade below the US$40,000 level.
These are some of the main moves in markets:
Stocks
S&P 500 futures increased 0.3% as of 8:31 a.m. in Tokyo. The gauge rose 0.1%
Nasdaq 100 contracts added 0.3%. The gauge fell 0.3%
Nikkei 225 futures increased 1.4%
S&P/ASX 200 futures added 0.8%
Hang Seng contracts were steady
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at US$1.2193
The British pound was at US$1.4205 after rising 0.6%
The Japanese yen was at 109.85 per dollar after falling 0.6%
The offshore yuan was at 6.3787 per dollar
Bonds
The yield on 10-year Treasuries rose three basis points to 1.61%
Australia’s 10-year yield increased five basis points to 1.68%
Commodities
West Texas Intermediate crude rose 0.5% to US$67.19 a barrel
Gold was at $1,897.18 an ounce-BLOOMBERG