By Shinichi Saoshiro
TOKYO (Reuters) – Asian stocks rose on Wednesday after tech sector strength lifted Wall Street shares while concerns about Italy’s debt prompted investors to move into lower-risk government debt elsewhere, pushing U.S. Treasury yields down from recent highs.
MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.7 percent. Japan’s Nikkei <.N225> rose 0.4 percent.
European spreadbetters predicted shares there would shake off concerns over Italian debt and open broadly higher as tech stocks globally continue to rise.
Britain’s FTSE <.FTSE> was seen opening 0.1 percent higher, Germany’s DAX <.GDAXI> gaining 0.2 percent and France’s CAC <.FCHI> up 0.3 percent.
A firmer-than-expected print on first quarter growth lifted Australian stocks <.AXJO> by half a percent.
The Nasdaq <.IXIC> closed at a record high for the second day in a row on Tuesday with help from the technology and consumer discretionary sectors, aided by the upbeat outlook for the U.S. economy. [.N]
But the S&P 500 <.SPX> dipped, with the financial sector hit by lower Treasury yields, which can reduce banks’ profits.
Treasury yields fell as investors moved back into safe-haven government debt after Italy’s new Prime Minister Giuseppe Conte vowed to enact economic policies that could add to the nation’s already-heavy debt load. [US/]
On the other hand, the debt concerns caused Italian government bond yields to rise again after they had declined to one-week lows on Monday. [GVD/EUR]
“The Italian political situation will remain uncertain, and considering its potential impact on European Central Bank policy, market volatility could continue to be relatively high,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.
The currency market’s response to comments from the new Italian prime minister was more positive, with the euro gaining after Conte said the government had no plans to leave the euro zone.
The euro was a shade higher at $1.1723
The lingering concerns over tit-for-tat trade tariffs and the risk of a bigger global trade war remained in the background, weighing on investor sentiment.
In the latest developments, Mexico imposed tariffs on a range of American products, retaliating for U.S. President Donald Trump’s decision last week to remove an exemption on steel and aluminum for allies Mexico, Canada and the European Union.
Trump economic advisor Larry Kudlow also revived the possibility that the president will seek to replace NAFTA with bilateral deals with Canada and Mexico.
The threat of rising trade protectionism has already taken a toll on global trade and could increase risks to growth, ANZ analysts Daniel Been and Giulia Lavinia Specchia said in a note.
“Against this backdrop, we believe financial markets will become even more sensitive to bad news,” they wrote, while recommending a defensive stance on risk-taking.
The dollar index against a basket of six major currencies <.DXY> was almost unchanged at 93.83.
The U.S. currency was little changed at 109.90 yen
The Australian dollar
The 10-year Treasury note yield was at 2.9269 percent
In commodities, Brent crude futures
(Additional reporting by Vidya Ranganathan; Editing by Richard Borsuk)