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GLOBAL MARKETS-Asia stocks near highs, yields up on U.S. stimulus risk

Published 11/01/2021, 03:43 pm
Updated 11/01/2021, 03:48 pm
© Reuters.
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Asia index off all-time top, Japan on holiday

* Biden to announce new stimulus plans this week

* Treasury yields highest since March on reflation trade

* Oil prices near 11-month peak amid supply curbs

By Wayne Cole

SYDNEY, Jan 11 (Reuters) - Asian shares paused near historic highs on Monday while Treasury yields were at a 10-month top as "trillions" in new U.S. fiscal stimulus plans were set to be unveiled this week, stoking a global reflation trade.

Investors were keeping a wary eye on U.S. politics as pressure grew to impeach President Donald Trump, though signs were an actual trial could be some time away. broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.2%, having surged 5% last week to record highs. Japan's Nikkei .N225 was on holiday after closing at a 30-year high on Friday.

South Korea .KS11 reversed an early jump to fall 1.5%, and Chinese blue chips .CSI300 were steady.

"Asia has come through the second global crisis this millennium with its credentials," said ANZ chief economist Richard Yetsenga.

"Asia's growth is stronger, with for the most part better demographics and debt levels, than advanced economies."

He noted a turnaround in fortunes between the semiconductor and energy sectors highlighted Asia's success, given the region produced around 45% of the world's semiconductors.

"For the first time the global semiconductor sector's market capitalisation has surpassed energy," he said. "At the time of the last crisis, 12 years ago, the energy sector was more than five times larger."

Futures for the S&P 500 ESc1 slipped 0.6% from all-time peaks, after gaining 1.8% last week. EUROSTOXX 50 futures STXEc1 eased 0.1% and FTSE futures FFIc1 were flat.

Longer-term Treasury yields were at their highest since March after Friday's weak jobs report only fanned speculation of more U.S. fiscal stimulus now that the Democrats have control of the government. Joe Biden is due to announce plans for "trillions" in new relief bills this week, much of which will be paid for by increased borrowing. the same time, the Federal Reserve is sounding content to put the onus on fiscal policy with Vice Chair Richard Clarida saying there would be no change soon to the $120 billion of debt the Fed is buying each month. the Fed reluctant to purchase more longer-dated bonds, 10-year Treasury yields US10YT=RR jumped almost 20 basis points last week to 1.12%, the biggest weekly rise since June.

Treasury futures TYc1 lost another 3 ticks early Monday.

Mark Cabana at BofA warned stimulus could further pressure the dollar and cause Fed tapering to begin later this year.

"An early Fed taper creates upside risks to our year-end 1.5% 10-year Treasury target and supports our longer-term expectations for neutral rates moving towards 3%," he said in a note to clients.

The poor payrolls report will heighten interest in U.S. data on inflation, retail sales and consumer sentiment.

Earnings will also be in focus as JP Morgan JPM.N , Citigroup (NYSE:C) C.N and Wells Fargo (NYSE:WFC) WFC.N are among the first companies to release fourth-quarter results on Jan. 15.

The climb in yields in turn offered some support to the down-trodden dollar, which had edged up to 90.439 =USD against a basket of currencies from last week's low of 89.206.

The euro pulled back to $1.2170 EUR= from a recent top of $1.2349, breaking support around $1.2190. The dollar also firmed to 104.18 yen JPY= from a trough of 102.57 hit last week.

The sudden lift in bond yields undermined gold, which pays no interest, and the metal fell back 1.1% to $1,828 an ounce XAU= from its recent peak of $1,959. GOL/

Oil prices ran into profit taking after reaching their highest in nearly a year on Friday, gaining 8% on the week after Saudi Arabia pledged to cut output. O/R

Brent crude LCOc1 futures dipped 65 cents to $55.34, while U.S. crude futures CLc1 lost 41 cents to $51.83 a barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes)

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