Market Close Mar 01

Risk appetite boosted as bond volatility calms 

Sterling gets vaccine lift with more gains seen; Yuan trades firm before NPC; Weak China factory data seen as a blip 

Risk appetite boosted as bond volatility calms 
The markets mood was boosted by the US Food and Drug Administration's authorisation of the J&J vaccine for adults

HONG KONG: Asian risk markets rallied as bonds stabilised on Monday and signs of progress in the US stimulus package and vaccine rollouts helped boost sentiment, with investors looking past the weak Chinese factory data published at the weekend.

The US House of Representatives passed the $1.9 trillion coronavirus relief package, with Secretary of the Treasury Janet Yellen saying the plan ensures “people make it to the other side of this pandemic and are met there by a strong, growing economy”. 

The mood was also boosted by the US Food and Drug Administration authorisation of the J&J vaccine for adults. It is expected to speed up the vaccine rollout as it requires only one jab.

Read more: China rare earth stocks ‘on fire’

Japan’s Nikkei 225 index rocketed 2.41%, Australia’s S&P ASX 200 soared 1.74%, Hong Kong’s Hang Seng index surged 1.54% and China’s CSI300 added 1.54%. Regionally the MSCI Asia Pacific index jumped 1.84%.

US Treasuries were marginally weak with the 10-year yield rising 2 basis points to 1.44% but much below the one-year high of 1.614% struck last week.

The pound rebounded from its recent falls to trade at $1.40 after Britain reported more than 20 million people had received a first dose of a Covid-19 vaccine, while cases last week were down 21.2% compared with the previous seven-day period, and deaths were down 33.5%.

British finance minister Rishi Sunak is set to announce an extra 1.65 billion pounds to fund the country's vaccination roll-out as part of his annual budget statement on Wednesday. Technically, the pound’s outlook remains solid, ING strategists said.

BUYING PRESSURE

“Net longs on the pound are now well above the 1 standard-deviation band and approaching the top of their five-year range. While for most currencies this would suggest buying pressure might start to abate, the build-up of GBP longs may have further to run in our view,” said ING’s fx strategist Francesco Pesole.

He added that unlike the past few years, the currency no longer had to discount Brexit-related uncertainty which had kept its positioning generally skewed to the downside.

The yuan inched up as markets awaited policy cues on from this week's annual gathering of the National People's Congress, China's parliament.

LEVERAGE CONTROL

The onshore spot yuan opened at 6.4671 per dollar and was changing hands at 6.4627, 54 pips firmer than the previous late session close.

“With growth set to recover strongly this year, we expect the NPC to shift focus towards risk and leverage control, announcing a smaller fiscal deficit and more prudent monetary policy stance,” says Dr Tao WANG, Head of Asia economics and Chief China economist of UBS Global Research

“The NPC will also approve the full 14th FYP outline, push for further reform and opening, and highlight technology innovation and greener development as future goals.”  

Asia Stocks

  • Japan’s Nikkei 225 index rocketed 2.41%
  • Australia’s S&P ASX 200 soared 1.74% 
  • Hong Kong’s Hang Seng index surged 1.54%
  • China’s CSI300 added 1.54%
  • The MSCI Asia Pacific index jumped 1.84%.

Stock of the day

Ali Health rose as much as 11.5%  after it was added to the Hang Seng index after a quarterly review. The total number of constituents were increased from 52 to 55. Longfor Group Holdings Ltd. and Haidilao International Holding Ltd were also added. They were up 8% and 10.2%.

Also on ATF:

Big finance pushes deeper into green markets 

Crunch week looms for yields and relative US/China value

Yellen Nikkei S&P ASX Hang Seng CSI300 Sunak