Buyers threat urge for food, US stimulus, bond yields

Visitors stand in front of an electronic ticker at the Tokyo Stock Exchange (TSE) operated by Japan Exchange Group Inc. (JPX) in Tokyo, Japan on Monday, November 30, 2020.

Toru Hanai | Bloomberg via Getty Images

SINGAPORE – Asia-Pacific markets lost their early momentum on Wednesday after investors returned to risky assets overnight. They were confident that a massive US stimulus package would soon be approved.

The Nikkei 225 abandoned its early gains to trade near flat, and the Topix index also remained little changed. South Korea’s Kospi pulled back gains of more than 1% after the market opened nearly flat for trading while the Kosdaq rose 0.27%.

In Australia, the benchmark index ASX 200 failed to sustain early gains and fell 0.31%, with the energy sector falling 2.11% as oil prices remained under pressure. The heavily weighted financial sub-index and the materials index also fell by 0.76% and 1.92%, respectively.

Mainland Chinese stocks rose: the Shanghai Composite rose 0.22% while the Shenzhen component rose 0.83%. In Hong Kong, the Hang Seng Index rose 0.33%.

The Asia Pacific session followed an overnight session on Wall Street as bond yields fell and technology stocks made a comeback. The Nasdaq Composite was up 3.7% and had its best day since November.

“Global stocks rose as risk appetite returned,” said analysts at ANZ Research on Wednesday morning. “Investor confidence was boosted by the expectation that (US President Joe) Biden’s $ 1.9 billion stimulus package would soon be approved.”

Currencies and oil

In the forex market, the US dollar rose 0.19% against a basket of its peers to 92.129 but trailed 92.503 from levels seen in the previous session.

The Japanese yen changed hands at 108.77 to the dollar, weakening around 108.45 from previous levels, while the Australian dollar fell below the $ 0.77 mark and fell 0.38% to $ 0.7682 .

Carol Kong, a currency strategist at Commonwealth Bank of Australia, said one morning that outside of near-term downside risks, the bank is bullish on the Australian dollar and forecasts it will hit around $ 0.83 in the third quarter of 2021.

“Australia’s successful virus containment has contributed to its ‘v-shaped’ economic recovery,” Kong said in the note, adding that the recovery could accelerate with the introduction of Covid-19 vaccines. This could potentially tighten the labor market sooner than expected.

“As a result, the (Reserve Bank of Australia) could tighten monetary policy ahead of the (US Federal Reserve), which poses an upside risk to our AUD / USD forecast profile,” she said.

Elsewhere, oil prices remained under pressure. During Wednesday’s Asian session, US crude fell 0.62% to $ 63.61 while Brent fell 0.73% to $ 67.03. The global benchmark passed the $ 70 mark earlier this week after reports that Saudi oil facilities were targeting missile and drone strikes.

Saudi Arabia said there was no significant infrastructure damage that caused oil prices to fall.