Equity markets in Asia are poised for a muted start as US stocks caught bids late in the day amid holiday-thinned trading. The dollar gained as investors boosted bets on the Federal Reserve’s rate-hike path.
(Bloomberg) — Equity markets in Asia are poised for a muted start as US stocks caught bids late in the day amid holiday-thinned trading. The dollar gained as investors boosted bets on the Federal Reserve’s rate-hike path.
Futures on Japanese stocks point to a higher open in Tokyo and contracts for US benchmarks edged higher in early Asia trading. Australia and Hong Kong are set to reopen after a long weekend. Declines in the Golden Dragon index of US-listed Chinese companies signal potential headwinds for mainland markets.
After spending most of the day in the red, the S&P 500 eked out a gain in the final minutes of the session. Volumes were light — more than 20% below the 30-day average — with much of Europe still shuttered for holidays ahead of Tuesday’s reopening. The Nasdaq 100 pared losses into the close, ending marginally lower as an Apple Inc. report that personal computer shipments fell sharply weighed on the tech-heavy benchmark.
Treasury yields posted modest gains as traders continued to mark up chances of another quarter-point Fed hike in May. Swap contracts repriced to levels indicating about 80% odds of a quarter-point hike on May 3, up from 75% on Friday. After the Fed set its policy band at 4.75%-5% on March 22, the odds of a May rate hike almost vanished amid a collapse in bank shares after several institutions failed.
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The yen was little changed in early Asian trading, underperforming major peers on Monday after Kazuo Ueda signaled any significant changes to monetary policy may be unlikely for now in his inaugural news conference as Bank of Japan governor.
Chinese inflation data will be in focus Tuesday, with expectations of a weak reading on consumer prices and deflation in factory-gate prices will keep the stimulus option open for the central bank.
In South Korea, policymakers are widely expected to keep rates on hold, with 15 out of 16 economists predicting the benchmark interest rate will stay at 3.5%, for the second meeting in a row.
Traders upped wagers on a May rate hike in the US ahead of Wednesday’s report on consumer prices, which is expected to show a 0.4% monthly increase in core CPI. Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. kick off reporting for the banking sector Friday, offering insights on the health of the financial system.
In a report Monday, the International Monetary Fund put forward that rates in the US and other industrial countries will revert toward ultra-low levels instead of the 1.5% to 2% real neutral interest rate former US Treasury Secretary Lawrence Summers has suggested.
Key events this week:
- China PPI, CPI, Tuesday
- IMF global financial stability report, Tuesday
- Chicago Fed’s Austan Goolsbee, Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
- Canada rate decision, Wednesday
- US FOMC minutes, CPI, Wednesday
- Richmond Fed’s Thomas Barkin speaks, Wednesday
- China trade, Thursday
- US PPI, initial jobless claim, Thursday
- US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
- Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 7:17 a.m. in Tokyo. The S&P 500 rose 0.1%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 was little changed
- Nikkei 225 futures rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro was little changed at $1.0865
- The yen was little changed at 133.55 per dollar
Cryptocurrencies
- Bitcoin rose 1.4% to $29,562.54
- Ether rose 1% to $1,905.38
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.42%
Commodities
- West Texas Intermediate crude rose 0.2% to $79.86 a barrel
- Spot gold fell 0.8% to $1,991.48 an ounce
This story was produced with the assistance of Bloomberg Automation.Currencies
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