SYDNEY: Asian shares advanced to record highs on Monday as successful coronavirus vaccine rollouts globally raise hopes of a rapid economic recovery amid new fiscal aid from Washington, while oil prices rose on heightened tensions in the Middle East.
MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.4 percent to 736.4.
Japan’s Nikkei climbed 1.1 percent, despite data showing the country’s recovery from its worst postwar recession slowed in the fourth quarter.
Australia’s benchmark index added 0.9 percent while E-mini futures for the S&P 500 were up 0.3 percent in early Asian trading.
China and Hong Kong markets are shut for the Lunar New Year holiday. US stock markets will be closed on Monday for the Presidents Day holiday.
The highlight of the week will probably be minutes of the US Federal Reserve’s January meeting, where policymakers decided to leave rates unchanged.
While economists expect inflation to stay benign for some while yet, the so-called “reflation trade” has gathered steam in recent days largely led by coronavirus vaccines and hopes of massive fiscal spending under US President Joe Biden.
Biden pushed for the first major legislative achievement of his term, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan.
“In our view, as long as the rise (in inflation) is gradual, equity markets can continue to do well. However, unruly moves would certainly hurt investor sentiment,” said Esty Dwek, head of global market strategy, Natixis Investment Managers Solutions.
“Credit spreads have tightened sharply already, but they still have room to absorb some higher yields, making us more comfortable with credit risk than interest rate risk,” Dwek added.
“Commodities would be beneficiaries of an inflationary cycle, but they can still continue to recover without high core inflation as economies reopen and demand picks up.”
Oil prices climbed to the highest since January 2020 on hopes US stimulus will boost the economy and fuel demand.
Prices were also buoyant after a Saudi-led coalition fighting in Yemen said it intercepted an explosive-laden drone fired by the Iran-aligned Houthi group, raising fears of fresh Middle East tensions.
Brent crude rose $1 to $63.43 a barrel. US crude oil gained $1.2 to $60.7.
On Friday, the S&P 500 and Nasdaq set record closing highs. The Dow finished 0.1% higher at 31,458.4 points, the S&P 500 gained 0.5 percent to 3,934.83 and the Nasdaq added 0.5 percent to 14,095.47.
Action in currencies was muted.
The dollar was slightly higher against the Japanese yen at 105.01 while the euro rose to $1.2125 and the British pound was up 0.3 percent at $1.3886. The risk sensitive Australian and New Zealand dollars climbed 0.1 percent each.
That left the dollar index steady at 90.426.
Bitcoin was barely changed in early Asian trading at $47,994, below a record high of $49,714.66. It posted gains of roughly 20 percent in a milestone week marked by the endorsement of major firms such as Elon Musk’s Tesla.
Asian shares hit all-time highs, oil rises on Middle East tensions
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Asian shares hit all-time highs, oil rises on Middle East tensions
- Japan’s Nikkei climbed 1.1 percent, despite data showing the country’s recovery from its worst postwar recession slowed in the fourth quarter
Emerging markets should depend less on external funding, says Nigeria finance minister
RIYADH: Developing economies must rely less on external financing as high global interest rates and geopolitical tensions continue to strain public finances, Nigeria’s finance minister told Al-Eqtisadiah.
Asked how Nigeria is responding to rising global interest rates and conflicts between major powers such as the US and China, Wale Edun said that current conditions require developing countries to rethink traditional financing models.
“I think what it means for countries like Nigeria, other African countries, and even other developing countries is that we have to rely less on others and more on our own resources, on our own devices,” he said on the sidelines of the AlUla Conference for Emerging Market Economies.
He added: “We have to trade more with each other, we have to cooperate and invest in each other.”
Edun emphasized the importance of mobilizing domestic resources, particularly savings, to support investment and long-term economic development.
According to Edun, rising debt servicing costs are placing an increasing burden on developing economies, limiting their ability to fund growth and social programs.
“In an environment where developing countries as a whole — what we are paying in debt service, what we are paying in terms of interest costs and repayments of our debt — is more than we are receiving in what we call overseas development assistance, and it is more than even investments by wealthy countries in our economies,” he said.
Edun added that countries in the Global South are increasingly recognizing the need for deeper regional integration.
His comments reflect growing concern among developing nations that elevated borrowing costs and global instability are reshaping development finance, accelerating a shift toward domestic resource mobilization and stronger economic ties among emerging markets.
