Most Asian stocks rose on Monday and Treasuries maintained a rally, bolstered by Jerome Powell’s signal that support for Federal Reserve policy in the pandemic era will be cautiously and gradually withdrawn.
Japan led earnings and Chinese tech stocks advanced to bargain hunting in the hit sector. US and European futures held steady after a record Wall Street shutdown in the wake of President Powell’s Jackson Hole speech. Powell said the Fed may start cutting bond purchases this year but is in no rush to raise interest rates and will be guided by data on Covid-19 risks.
Powell did not give a specific timeline for reducing the stimulus. Traders are waiting for US employment data this week to assess whether the economic recovery warrants an earlier decline. The strong numbers could extend the first weekly rise in the Treasury yield curve since July. The dollar took a fall.
The focus in China remains Beijing’s regulatory barrage against private industries. A comment in Chinese state media described President Xi Jinping’s crackdown as a “profound revolution” that swept the country and warned that anyone who resisted would face punishment.
Central banks seek to reduce support for monetary policy in part to control inflation, while at the same time fostering economic recoveries that face the challenges of the delta virus strain. Global stocks are at all-time highs, suggesting markets are hoping officials can strike this delicate balancing act.
“There is no question that Powell was dovish, relative to pricing and market positioning,” wrote Chris Weston, head of research at Pepperstone Financial Pty, in a note. Weston remains “risk positive for now,” but added that a slowing global economy allied with normalizing Fed policy remains a threat.
Commodity markets are focused on Hurricane Ida. Gasoline futures in the United States soared after the storm hit the Louisiana coast, disrupting power supplies. The oil leaned down. Elsewhere, gold slashed gains and Bitcoin fell below $ 48,000.
Here are some key events to watch this week:
- The United States plans to withdraw almost all US troops from Afghanistan on Tuesday.
- OPEC + meeting on Wednesday’s departure
- Eurozone Manufacturing PMI Wednesday
- China Caixin Manufacturing PMI Wednesday
- US Employment Report Friday
Some of the main movements in the markets:
- S&P 500 futures rose 0.1% at 7:06 am in London. The S&P 500 rose 0.9%
- Nasdaq 100 futures added 0.1%. The Nasdaq 100 rose 1%
- Japan’s Topix index rose 1.1%
- Australia’s S & P / ASX 200 increased 0.3%
- South Korea’s Kospi rose 0.3%
- Hong Kong’s Hang Seng gained 0.1%
- China’s Shanghai Composite lost 0.1%
- Euro Stoxx 50 futures rose 0.1%
- The Japanese yen was at 109.76 to the dollar.
- The offshore yuan was trading at 6.4673 to the dollar.
- The Bloomberg Dollar Spot Index held steady
- The euro was at $ 1.1801
- The 10-year Treasury yield fell one basis point to 1.30%.
- Australia’s 10-year yield fell two basis points to 1.17%
- West Texas Intermediate crude fell 0.4% to $ 68.49 a barrel
- Gold was at $ 1,814.33 an ounce, down 0.2%.
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