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Asian stocks rally while bond market struggles for stability

Asian shares rallied on Monday as Japan’s Nikkei and Chinese blue chips added 2.1% and 0.8%, respectively. Moreover, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1% after it shed 3.7% Friday.

Last week, bond markets had a wild ride. Now, progress in the U.S. stimulus package underpins hopes about the global economy. In effect, oil prices were higher.

Over the weekend, Japanese numbers indicated the fastest growth in two years. In China, the official manufacturing PMI missed forecasts.

At the same time, investors await upbeat news from the February payrolls report and a raft of other U.S. data due this week.

Additionally, news deliveries of the Johnson & Johnson COVID-19 vaccine should start on Tuesday. The newly approved vaccine is helping sentiment.

Futures and yields on the move.

NASDAQ futures regained 1.2% and S&P 500 futures 0.8%. EURO STOXX 50 futures and FTSE futures were both 1.0% up.

Yields on U.S. 10-year notes were at 1.40%, from their peak of 1.61% last week. They were 11 basis points higher last week to be up 50 basis points on the year so far.

The bond bear market is now one of the most critical on record. Since August, the annualized price return from 10-year U.S. govt bonds has fallen 29. Moreover, Australia shed 19%, the U.K. lost 16%, and Canada off 10%.

Malaysia’s AMMB stock halts.

AMMB Holdings Bhd. asked for a 2-day suspension for its shares. The request came after the Malaysian bank said it would suffer losses. This followed a 2.83 billion-ringgit ($699 million) settlement over the 1MDB scandal.

This settlement will hurt its earnings for the year ending March 2021. This was a statement from the lender that held former Prime Minister Najib Razak’s bank accounts.

According to a filing, it will set aside provisions in the final quarter of the fiscal year. It will translate to a proforma loss of 93.89 sen a share and will skip the final dividend.

Chan Jit Hoong, an analyst at Hong Leong Investment Bank Bhd., downgraded the stock to hold from buy. He slashed his target price to 2.95 ringgit from 4.05 ringgit.

Maybank Kim Eng analyst Desmond Chng also cut his recommendation to hold from buy. The shares dropped more than 2% on Friday and have dropped 13% so far this year.

Meanwhile, European stocks bounced on Monday after sharp losses last week. A selloff in bond markets calmed, while hopes over the COVID-19 vaccination program and U.S. stimulus package further helped sentiment.

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