Asian stocks cling to gains as Fed worries ease

SINGAPORE, Aug. 24 (Reuters) – A rebound in China’s tech sector saw Asian stocks move higher on Tuesday, and markets were also cheered by positive US vaccination news and concerns over an impending cut on stimulus from the Federal Reserve.

Nasdaq and S&P 500 futures gained 0.15% each, while European stock markets were poised for a strong opening, with Euro Stoxx 50 futures gaining 0.19% and German DAX futures 0.16%.

The dollar licked its wounds after its sharpest one-day decline since May, which sparked a 5% oil price rally on Monday.

The COVID-19 infections caused by the highly contagious Delta variant have raised concerns about the recovery from the global health crisis.

“The market hopes the Delta option will prevent the Fed from acting too aggressively or too soon,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.

MSCI’s broadest index for Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) gained 1.3%, while the indices for Japan (.N225) and South Korea (.KS11) rose 1%. Australian stocks (.AXJO) gained 0.2% and Taiwan’s stocks (.TWII) gained 0.6%.

“This tug of war will of course not end anytime soon. But the silver lining is that the market is cautiously optimistic and there is also a lot of liquidity waiting on the verge,” said Menon.

The overnight data showed strong, albeit slowing, service and manufacturing activity in Europe, while business growth in the United States slowed for the third straight month as the spread of the Delta virus variant took its toll. Continue reading

Chinese markets (.CSI300) rose 1.1%, with technology stocks (.HSTECH) extending their rally after taking a hit in recent weeks on regulatory concerns.

Wall Street’s strength underpinned sentiment in Asia. The Nasdaq (.IXIC) closed at a record high on Monday after the U.S. Food and Drug Administration granted full approval to the COVID-19 vaccine developed by Pfizer (PFE.N) and BioNTech, a move that would make the vaccinations in the US could accelerate. Continue reading

Global markets took a hit last week on worries that the Fed is nearing its stimulus measures, with Asia’s main index plummeting 4.8% to 3% for the year.

Improved sentiment overnight sent the dollar down more than 1% against its Australian and Canadian counterparts, as well as the Norwegian and Swedish krona.

“A positive risk backdrop has driven the outflow from the dollar,” said Chris Weston, director of research at Melbourne brokerage Pepperstone, adding that positive analyst comments on oil and cyclical stocks also helped general sentiment.

The dollar rose 0.1% against the yen to 109.79. The euro lost 0.0% on the day to $ 1.1741 after losing 1.1% in a month, while the dollar index, which tracks the greenback against a basket of currencies from other major trading partners, climbed to 93.005.

Last week the dollar index hit a nine-month high on betting that the Fed would begin to pull away from its expansionary monetary policy, but that view began to change on Friday when Dallas Fed President Robert Kaplan said he could do his hawkish Rethinking attitudes in the event of the virus harms the economy. Continue reading

Now investors are less confident that Fed chief Jerome Powell’s speech this week in Jackson Hole will set a timetable for ending the Fed’s bond-buying program.

The benchmark 10-year government bond yield rose to 1.2684%.

In the commodities markets, Brent crude oil futures rose 0.4% to $ 69 a barrel after rising more than 5% on Monday as a weaker dollar and strong global equity markets boosted crude oil after seven declines.

The gold price fell but remained above the key psychological level of $ 1,800.[GOL/[GOL/[GOL/[GOL/

Coverage of Anshuman Daga in Singapore; Additional coverage from Tom Westbrook; Editing by Shri Navratnam and Sam Holmes

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