(Bloomberg) — Asian stocks rose as Hong Kong stocks rallied in catch-up trading, while strong U.S. economic data supported views that the Federal Reserve will be slow to cut interest rates, leading to weaker regional bonds. It fell.
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Hong Kong’s stock market soared after a two-day weekend, following gains in the mainland stock market on Monday. Xiaomi made the biggest contribution to the Hong Kong benchmark’s rise following the debut of its electric vehicle.
Japanese stocks also rose, supported by the weaker yen. The currency firmed against the dollar on Monday after falling to near its lowest level this year. The decline raised the risk that Japanese authorities would intervene in the market.
U.S. stock futures edged lower as the S&P 500 index fell 0.2% on Monday, while the Nasdaq index rose by a similar amount.
In the bond market, yields in Australia and New Zealand rose in response to moves in US Treasuries. U.S. Treasuries were firmer in Asian trading after falling across the curve on Monday as manufacturing expanded unexpectedly for the first time since September 2022 and input costs rose, with 10-year Treasury yields at 10. It rose by more than a basis point.
The report lowered the amount of Fed relief factored into this year’s swap contracts to about 65 basis points, less than policymakers expected.
“Investors are certainly front and center on the possibility of a more hawkish shift by the Fed,” said Jose Torres of Interactive Brokers. “After all, the Fed’s first rate cut could happen later this year, and the probability of a rate cut this June is inching closer to coin-flip probability.”
Data later this week is expected to show employment growth continues in March, although wage growth slows. Fed Chairman Jerome Powell, who is scheduled to speak on Wednesday, said Friday that officials are waiting for further evidence that prices are being controlled, and that cutting interest rates is not appropriate until officials are confident that inflation is under control. He added that there was no.
BMO Capital Markets’ Ian Lingen and Beil Hartman say the market seems “comfortable” to point to manufacturing sell-offs as a trigger for U.S. Treasuries, but bond selling has already begun before the headlines. was in progress.
“Monday’s futures market price action suggests that the pendulum of US interest rate sentiment may be shifting in a hawkish direction, but it goes without saying that expectations will become more meaningful as more data emerges. “There is plenty of room for change,” they noted.
The Institute for Supply Management’s manufacturing index rose to 50.3 last month. Although the index was barely above the 50 mark, which is the dividing line between expansion and contraction, it brought an end to 16 consecutive months of contraction in economic activity. At the same time, the group’s price paid index rose to 55.8, its highest level since July 2022.
Perhaps the “most troubling” thing is the rising prices paid, said Michael Scholl of Marketfield Asset Management. “This shows that some of the ‘temporary’ relief from reflationary forces is starting to reverse.”
In Asia, the data set released on Tuesday includes India’s PMI. Australia’s central bank will switch to a new system for implementing monetary policy as passive quantitative tightening leads to a decline in foreign exchange reserves in the banking system, Australian central bank assistant governor Christopher Kent said on Tuesday.
In the commodity market, rising geopolitical risks in the Middle East and tight supplies from Mexico kept crude oil near a five-month high, contributing to the price rise. Gold rose after hitting an all-time high on Monday.
This week’s main events:
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Eurozone S&P Global Manufacturing PMI, Tuesday
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US factory orders, light vehicle sales, JOLTS job openings, Tuesday
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Fed’s John Williams, Loretta Mester, Mary Daly and Michelle Bowman speak on Tuesday
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St. Louis Fed President Alberto Moussallem will be sworn in on Tuesday. He replaces James Bullard.
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China Caixin releases PMI on Wednesday
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Eurozone CPI, unemployment rate, Wednesday
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Japanese services PMI, Wednesday
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US ADP Employment, ISM Services, Wednesday
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Federal Reserve Chairman Jerome Powell speaks on Wednesday
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Fed’s Austan Goolsby, Adriana Kugler and Michelle Bowman will also speak Wednesday.
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Eurozone S&P Global Services PMI, PPI, Thursday
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U.S. new jobless claims, Challenger layoffs, Thursday
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Fed’s Loretta Mester, Albert Moussallem, Thomas Barkin, Patrick Harker and Austan Goolsby speak Thursday
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European Central Bank releases report on March interest rate decisions on Thursday
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Eurozone retail sales Friday
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U.S. unemployment rate, nonfarm payrolls, Friday
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Fed’s Michelle Bowman, Thomas Barkin and Laurie Logan speak on Friday
Some of the major developments in the market include:
stock
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S&P 500 futures were little changed as of 10:31 a.m. Tokyo time.
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Nasdaq 100 futures fell 0.1%
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Japan’s TOPIX rose 0.3%
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Australia’s S&P/ASX 200 rose 0.1%
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Hong Kong’s Hang Seng rose 2.1%.
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Shanghai Composite: Almost no change
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Euro Stoxx50 futures little changed
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0737.
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The Japanese yen remained almost unchanged at 151.74 yen to the dollar.
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The offshore yuan was little changed at 7.2590 yuan to the dollar.
cryptocurrency
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Bitcoin fell 0.5% to $69,398.01.
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Ether fell 0.1% to $3,492.78.
bond
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The 10-year government bond yield was almost unchanged at 4.30%.
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Japan’s 10-year bond yield remains almost unchanged at 0.745%
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The Australian 10-year bond yield rose 6 basis points to 4.05%.
merchandise
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West Texas Intermediate crude rose 0.3% to $83.99 per barrel.
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Spot gold fell 0.1% to $2,248.46 an ounce.
This article was produced in partnership with Bloomberg Automation.
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