Asian shares rise on back of US stimulus bill

But emerging currencies come under pressure as the dollar firms

A spike in oil prices past $70 for the first time since the pandemic sparked some worries about inflation for energy-hungry Asia.

A spike in oil prices past $70 for the first time since the pandemic sparked some worries about inflation for energy-hungry Asia.

 

Asian shares broadly rose on Monday after the passage of a $1.9 trillion (€1.6 trillion) US stimulus bill boosted optimism about the global economic recovery, with stock markets in Singapore and Malaysia outperforming on local company news.

Shares in Taiwan, India and Thailand were higher, as upbeat Chinese exports data also underpinned appetite for risk. Asia’s emerging currencies, however, came under pressure as the dollar firmed on the back of stronger-than-expected jobs data and the pandemic relief bill.

The US Senate passed the Covid-19 relief plan on Saturday and US President Joe Biden said he hoped for a quick passage of the revised bill by the House of Representatives. Higher US yields also kept pressure on Asia’s bond markets and valuations.

Mizuho Bank analysts said the US fiscal passage “may be fanning the embers of reflation further this week.” “On the other (hand) discomfort with excessive and abrupt pick-up in UST bond yields could roil some parts of EM.”

Worries

A spike in oil prices past $70 for the first time since the pandemic sparked some worries about inflation for energy-hungry Asia.

Singapore’s stock index rose to its highest in over a year, led by a rally in the shares of Jardine Strategic and Jardine Matheson, which climbed nearly 20 per cent and 8 per cent respectively.

Jardine Matheson said it plans to buy the remaining 15 per cent of Jardine Strategic that it does not already own for about $5.5 billion to simplify structures of the sprawling Asian conglomerate that has a foot in construction to aviation. The Singapore dollar dipped 0.2 per cent to its lowest since late November.

In Malaysia, shares jumped 1.5 per cent, with Petronas Chemicals Group the biggest gainer. The petrochemical product maker jumped around 10 per cent after CGS-CIMB upgraded the stock to “Add” and raised its price target.

Meanwhile, Philippine shares fell more than 1 per cent, giving up last week’s gains. Stocks in Indonesia and the rupiah dipped. The country is susceptible to higher US yields given that the Southeast Asian nation houses some of the highest-yield debt in emerging markets.

The yield on Indonesia’s 10-year bonds shot up 19.2 basis points this session to 6.817 per cent. Chinese exports grew at a record pace in February from a year earlier, data showed over the weekend. Exports in dollar terms surged 154.9 percent from a year ago when Covid-19 battered the economy. - Reuters