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GLOBAL MARKETS-Asia shares, commodities firm on recovery bets; A$ hit by China move

Stock Markets May 06, 2021 11:10
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© Reuters.

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Global asset performance http://tmsnrt.rs/2yaDPgn
* World FX rates http://tmsnrt.rs/2egbfVh

By Hideyuki Sano
TOKYO, May 6 (Reuters) - Asian shares rose on Thursday and
commodity prices held near multi-year highs as investors
switched to cyclicals amid hopes of a strong economic recovery,
while the Australian dollar fell after China said it would end
economic dialogue with Canberra.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.25%, and Japan's Nikkei .N225 jumped
1.8% as it reopened after a five-day holiday.
Chinese shares, also resuming trade for the first time since
last week, were mixed in early trade, with the Shanghai
Composite .SSEC up 0.45% and CSI300 .CSI300 down 0.2%.
On Wall Street, Dow .DJI hit a record high overnight,
having risen 0.29%, while the S&P 500 .SPX added 0.07%, led by
gains in energy and other cyclical shares.
The Nasdaq Composite .IXIC gave up its earlier gains to
end 0.37% lower on Wednesday as megacap technology companies
slipped, following sharp declines on Tuesday. .N
Richly valued tech shares fell after U.S. Treasury Secretary
Janet Yellen's suggested rate hikes may be needed to stop the
economy from overheating, though she later said she was not
"predicting or recommending" a near-term hike. With very few Federal Reserve officials ready to discuss
withdrawing stimulus and the world economy looking set to post a
strong recovery from the pandemic-triggered recession, investors
have switched to cyclicals - companies that are heavily affected
by economic conditions, analysts said.
"This year, both the U.S. and Chinese economy could grow 6%
or more. If the world's two biggest economies are growing that
much, clearly that's positive," said Norihiro Fujito, chief
investment strategist, Mitsubishi UFJ Morgan Stanley Securities.
Against this backdrop, commodity prices are riding high,
with copper CMCU3 flirting with 10-year peaks. MET/L
Oil prices also held near their March tops. U.S. crude
futures stood at $65.65 per barrel CLc1 , little changed on the
day but just below Wednesday's two-month high of $66.76. O/R
Thomson Reuters CRB index .TRCCRB has risen to its highest
level since 2015, having gained more than 21% so far this year.

BONDS AND CURRENCIES
Higher commodity prices are fuelling inflation expectations
in the bond market.
The U.S. breakeven inflation rate, or inflation expectations
calculated from the yield gap between inflation-linked bonds
US10YTIP=RR and conventional bonds, rose to as high as 2.48%
overnight.
But the U.S. nominal bond yields held relatively stable,
with the 10-year U.S. Treasuries yield little changed at 1.584%
US10YT=RR .
"Bonds were supported partly because the pace of
vaccinations has slowed in the States and as real-money
investors are starting to buy," said Naokazu Koshimizu,
economist at Nomura Securities.
"Rise in inflation is also driven more by supply constraints
than demand, which is why we are seeing rising inflation
expectations and fall in nominal yields," he added.
In currencies, the Australian dollar dropped 0.5% to $0.7712
AUD=D4 after China's state economic planner said it had
decided to "indefinitely suspend" all activities under the
China-Australia Strategic Economic Dialogue. The British pound was flat at $1.3910 GBP=D4 ahead of a
central bank policy review.
The Bank of England could slow the pace of its bond buying
to allow the quantitative easing programme to last until the end
of the year, as it could reach the cap by September at the
current pace of buying.
Other currencies were little moved, with focus on Friday's
U.S. monthly jobs report that is expected to show that nonfarm
payrolls increased by 978,000 jobs last month.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates YTD http://tmsnrt.rs/2egbfVh
Global asset performance http://tmsnrt.rs/2yaDPgn
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Himani Sarkar)

GLOBAL MARKETS-Asia shares, commodities firm on recovery bets; A$ hit by China move
 

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