Asian stocks rise, track US gains before Federal Reserve meeting

Asian stocks rose on Tuesday, tracking gains by Wall Street’s main indexes to record highs, as investors looked to key central bank meetings this week, starting with the United States Federal Reserve.

An index of the region’s share markets excluding Japan strengthened by 0.7 percent, led by a 1.2 percent jump in Australia’s benchmark S&P/ASX 200 index.

Japan’s Nikkei 225 gained 0.6 percent to just below the closely watched 30,000 mark, while the broader Topix added 0.5 percent.

China’s blue chip CSI 300 index climbed 0.7 percent, and Hong Kong’s Hang Seng gained 0.7 percent.

On Monday, the S&P 500 and Dow Jones Industrial Average soared on gains in travel stocks as mass vaccinations in the US and congressional approval of a $1.9 trillion aid bill raised investor optimism.

E-mini futures for the S&P 500 edged up 0.06 percent.

Investors are focused on the Federal Reserve’s two-day policy meeting, which will conclude on Wednesday, as bond yields have surged this year on investors betting that central bankers will need to raise rates sooner than they have so far signalled as inflationary pressures increase.

So-called reflation trades stand to benefit if the central bank maintains a hands-off approach to the recent rise in yields. Bets on a faster economic recovery have already helped push one market gauge of inflation to its highest level since 2008 and a renewed climb in yields could spur the rotation from growth to value stocks.

Federal Reserve policymakers are expected to forecast that the US economy will grow in 2021 by the fastest rate in decades.

The Bank of England also meets this week on Thursday, while the Bank of Japan wraps up a two-day gathering on Friday.

“Markets are likely to be in a holding pattern ahead of this … heavy central bank-laden week,” write analysts at TD Securities.

Wall Street gains

On Wall Street, the Dow Jones Industrial Average rose 174.82 points, or 0.53 percent, to 32,953.46, the S&P 500 gained 25.6 points, or 0.65 percent, to 3,968.94 and the Nasdaq Composite added 139.84 points, or 1.05 percent, to 13,459.71.

Airline shares rose as the companies pointed to concrete signs of an industry recovery as vaccine distribution schemes help spur leisure bookings.

Germany, France and Italy hit pause on AstraZeneca’s COVID-19 vaccine shots after several countries reported possible serious side effects.

The development will be watched in Australia, where the vaccine is also being administered.

The pan-European STOXX 600 index was flat on Monday, after touching its highest level since February 2020.

Longer-term US Treasury yields slipped further on Tuesday, as the market looked ahead to the Federal Reserve meeting and the latest government debt auctions.

The benchmark 10-year yield, which reached a more than one-year high of 1.642 percent last week, was back at 1.595 percent.

Rising inflation expectations could prompt the Federal Open Market Committee to signal it will start raising rates sooner than expected.

In currencies, the US dollar held small gains from overnight in muted price action ahead of the central bank meetings.

The greenback was largely flat at 109.165 Japanese yen, after rising as high as 109.365 on Monday for the first time since June.

The euro was little changed at $1.19320, languishing for an eighth session below the closely watched $1.20 level.

Bitcoin continued its slide from a record high of $61,781.83 reached on Saturday, last trading 3 percent weaker on the day at approximately $53,915.

US West Texas Intermediate crude oil for April changed hands at $64.79 a barrel, down 60 cents. Brent crude futures for May stood at $68.21 a barrel, losing 67 cents.