April 21, 2021

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Asian stocks rise on U.S. spending plan, regional factory recovery

4 min read

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Asia’s emerging stock markets climbed on

Thursday, supported by surveys showing higher production across

factories in the populous continent last month, and the fillip

given to Wall Street by the U.S. government’s $2 trillion spending

plan.

Stock markets in Taiwan, South Korea, and

Thailand climbed more than 0.6% each, while gains across

the rest of the region were capped at less than half a percent.

“With much of Asia Pacific on holiday on Friday, activity is

somewhat muted,” Jeffrey Halley, a senior market analyst for Asia

Pacific at OANDA said.

The U.S. plan, outlined by President Joe Biden on Wednesday,

follows the recent $1.9 trillion pandemic relief package, and if

passed, would add further fuel to economic recovery.

Uncertainty over the plan, however, kept elevated U.S. 10-year

bond yields from pushing much higher and the dollar

remained supported by the U.S. growth outlook. That weighed on

Asia’s emerging currencies, which were trading flat to slightly

lower.

The pressure on the region’s risk-sensitive currency and bond

markets is unlikely to abate, as the U.S. economy looks set to

outpace the global recovery with aggressive coronavirus

vaccination campaigns and cheap money likely to be remain

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available for some time.

A poll by Reuters found that battered emerging markets

currencies will only pare some of their recent steep losses over

the coming year, with those analysts adding that the sell-off was

likely in the next three months.

The rupiah, one of the highest yielders in emerging

markets, lost as much as 0.5% before recovering slightly as

trading went on. Stocks were flat in late trade.

Indonesia raised 15.02 trillion rupiah from an additional

bonds auction on Wednesday. Recent auctions have been weak due to

higher U.S. yields driving capital away from emerging markets.

“The amount of the latest conventional bonds sold was still

below target. If there is no turnaround in bond market sentiment

over the next few weeks, the government probably needs to embrace

the higher funding costs,” OCBC bank analysts said.

Surveys showing Asia’s factories stepped up production in

March also supported sentiment.

Markets in the Philippines were closed. Most markets across

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Asia will be shut on Friday.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields fell 3.40 basis points

to 6.78%

** Top Glove Corp Bhd and Supermax Corp Bhd

led gains in Malaysia

** Singapore Exchange explores joining SPAC party but with

restrictions

** Singapore central bank seen on hold on growth risks from

COVID-19 – Reuters Poll

Asia stock indexes and currencies at 0637 GMT

COUNTRY FX RIC FX FX INDEX STOCKS STOCKS

DAILY % YTD % DAILY % YTD %

Japan -0.06 -6.80 0.72 7.09

China -0.32 -0.68 0.48 -0.42

India +0.00 -0.05 0.19 5.27

Indonesia -0.21 -3.51 0.03 0.14

Malaysia +0.00 -3.02 0.35 -2.96

Philippines – -1.13 – -9.76

S.Korea -0.01 -4.04 0.85 7.45

Singapore -0.16 -1.92 0.29 11.62

Taiwan +0.02 -0.15 0.85 12.48

Thailand -0.13 -4.25 0.69 10.27

(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Simon

Cameron-Moore and Sherry Jacob-Phillips)

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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Reuters

2021-04-01 03:08:44

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