Rise in Asian shares adds to optimism about world growth

Sydney — Asian share markets edged higher on Monday while oil prices slipped as the ship blocking the Suez Canal was refloated, raising hopes the vital waterway could reopen and ease global shipping backlogs.

The news added to optimism about world growth as markets look to President Joe Biden to outline his infrastructure spending plans this week, which could supercharge an already accelerating US recovery.

“We expect the global economy to expand robustly at 6.4% this year, fuelled by a large US fiscal stimulus, with positive spillovers for the rest of the world,” said Barclays economist Christian Keller.

“Rising inflation over the coming months should be transitory, and core central banks seem committed to looking through it.”

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3%, with activity restrained by the approach of quarter end. Chinese blue chips rose 0.8%.

Japan’s Nikkei gained 1%, though there was some nervousness when Nomura reported its US unit could face a $2bn loss related to a client.

There was also some caution after a $20bn wave of block trades hit markets on Friday, reportedly linked to investment fund Archegos Capital.

For now, Nasdaq futures were off 0.6% and S&P 500 futures 0.5%. Euro Stoxx 50 futures did manage to rise 0.2%, while FTSE futures were flat.

The prospect of faster US economic growth has spurred speculation of rising inflation and weighed on Treasury prices. Yields on US 10-year notes eased a touch on Monday to 1.66%, but were still not far from the recent 13-month top of 1.754%.

European yields have been restrained by active buying from the European Central Bank, widening the dollar’s yield advantage over the euro. The single currency was last at $1.1786, having hit a five-month low of $1.1760 last week.

Analysts at TD Securities noted the euro had failed to find any benefit from a very strong German IfO survey on Friday that showed business morale at a near two-year high and signs of recovery in the service sector.

“This suggests that market positioning still remains significantly skewed towards the long side in EurUSd — even though spot has seen a meaningful decline through the 200-day moving average,” they wrote in a note. “We continue to focus on downside risks from here.”

The dollar held at ¥109.50, having reached its highest since early June on Friday at 109.84. The dollar index stood at 92.774, after reaching its highest since mid-November.

The lift in yields has weighed on gold, which offers no fixed return, and left it at $1,730 an ounce.

Oil prices eased as markets assumed the refloating of the Ever Given would allow tankers to use the waterway again. More than 300 vessels are waiting to pass through the shipping route that accounts for 12% of global trade.

The market will also be cautious before an Opec meeting this week that will have to decide whether to extend supply limits, or loosen the spigots.

Brent fell 90c to $63.67 a barrel, while US crude lost $1.03 to $59.94 per barrel.

Reuters