Investing.com – Asia Pacific stocks were mostly up on Tuesday morning after their U.S. counterparts wrapped up another record-setting day overnight.
Early Asian trading followed another day of reflation trades globally, where markets bid up stocks, cryptocurrencies, oil and gold and U.S. Treasury yields saw almost 11-month highs.
Expectations that inflation will increase are growing as governments and central banks continue massive spending programs and implement ultra-easy monetary policies until economies recover from COVID-19.
“Reflation on the back of U.S. fiscal stimulus and positive vaccine news remains the major theme for markets,” National Australia Bank (OTC:NABZY) analysts said in a note.
Alongside U.S. shares, cryptocurrencies also saw surges. Bitcoin rose to a record high of $45,000, buoyed by a $1.5 billion investment from Tesla Inc. (NASDAQ:TSLA). The electric vehicle company also expects to accept the cryptocurrency as a payment method for its cars “in the near future,” it said in its 2020 annual report.
Rival cryptocurrency ethereum also reached its own record level of $1,784.85 on Monday.
The rollout of COVID-19 vaccines globally, and data suggesting that the number of COVID-19 cases has peaked in countries such as the U.S., are boosting investors risk appetite. A Citigroup Inc (NYSE:C). gauge of global risk aversion dropped to its lowest level since COVID-19 first impacted the market a year ago. Friday’s disappointing U.S. jobs report highlighted the economic risks as the pandemic continues, while also stressing the need for further stimulus measures.
“The vaccine roll-out programs certainly suggest that the reflation trade has legs, but central banks seem to want to ensure that expectations are kept in check,” Rabobank head of foreign exchange strategy Jane Foley told Bloomberg.
“This suggests a choppy ride,” she added.
Meanwhile, a $1.9 trillion stimulus package proposed by U.S. President Joe Biden in January continues its path towards Congressional approval. However, some investors, including former Secretary of the Treasury Larry Summers, have questioned the package’s price tag and raised risks such as faster inflation.
Investors also await comments from Federal Reserve Chairman Jerome Powell, who will speak at a webinar on Wednesday.