ASIAN stocks and US equity futures rose amid a dip in the dollar after bets on aggressive Federal Reserve interest-rate hikes cooled.
Shares climbed Monday in Australia and South Korea following a Wall Street rally Friday led by banks on earnings optimism. Japan is shut for a holiday.
China opens later against the backdrop of rising Covid cases, hobbling lockdowns and deepening property-sector woes. Central bank Governor Yi Gang said the monetary authority will step up implementation of prudent monetary policy. Another report flagged possible help for the real-estate industry.
Treasuries won’t trade in Asia due to the Japan break. Treasury futures edged up. Inversions on parts of the yield curve are a sign the bond market sees major growth risks from the Fed’s tightening cycle to fight inflation.
The dollar slipped, with a gauge of the greenback’s strength down from a record high. Oil fell as the market digests slowing demand and whether supply will be increased after President Joe Biden’s visit to Saudi Arabia.
Investors continue to be whipsawed by concerns over runaway inflation and the potential for a US recession. At the same time, equity valuations are becoming cheaper.
While stocks are pricing in a recession, there are signs that “this is a market that wants to start bottom fishing,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said on Bloomberg Television. “People are starting to look for things that have been de-risked,” she said, adding US small-caps are often cited as an example.
Data last week showing a drop in long-term US inflation expectations eased some fears that elevated price pressures are becoming entrenched. Strong retail sales underscored a resilient economy despite tightening monetary policy.
Still, the outlook remains troubling for many investors. The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update as nations run out of options to tackle worsening risks. — Bloomberg
Key events to watch this week:
Earnings this week include Bank of America, Goldman Sachs, Tesla
US Treasury Secretary Janet Yellen visits South Korea. Tuesday
Reserve Bank of Australia releases July minutes. Tuesday
UK Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey speak at event. Tuesday
Bank of Japan, European Central Bank rate decisions. Thursday
Some of the main moves in markets:
S&P 500 futures rose 0.1% as of 9:45 a.m. in Tokyo. The S&P 500 rose 1.9% Friday
Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 1.8%
Australia’s S&P/ASX 200 Index rose 0.6%
South Korea’s Kospi index added 0.8%
The Bloomberg Dollar Spot Index fell 0.1%
The euro was at $1.0095
The Japanese yen traded at 138.28 per dollar
The offshore yuan was at 6.7612 per dollar
The yield on 10-year Treasuries declined four basis points to 2.92% Friday
Australia’s 10-year bond yield added two basis points to 3.43%
West Texas Intermediate crude was at $95.89 a barrel, down 1.8%
Gold was at $1,707.84 an ounce