(Bloomberg) — Asian stocks climbed Monday as traders digested the outcome of Japan’s election and fresh all-time highs for U.S. shares. The yen weakened and a dollar gauge was steady.
Equities jumped more than 1% in Japan, where Prime Minister Fumio Kishida’s Liberal Democratic Party preserved its outright majority, avoiding worst-case scenarios and smoothing the way for fiscal stimulus. Australia and South Korea pushed higher. U.S. futures were in the green following records for the S&P 500 and Nasdaq 100 on optimism about corporate earnings.
Data from China injected a note of caution. Purchasing managers’ indexes signaled further economic weakness due to power shortages, surging commodity prices and strict Covid controls.
Traders are awaiting central bank meetings in the U.S, the U.K. and Australia this week. The Federal Reserve is expected to decide to scale back its bond-purchase program. Short-term bond yields from Canada to Australia have jumped on bets that monetary authorities will also have to hike interest rates to curb inflation. Longer maturity U.S. Treasury yields increased.
Fixed-income market upheavals suggest investors anticipate a slowdown in the recovery from the pandemic as price pressures lead central banks to pare back economic support. Global shares have so far shrugged off such risks and remain close to all-time peaks.
“Having been bullish on equities it feels right to turn a touch more cautious this week,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. “Although, the fact that equities have held up so well considering the rapid re-pricing of interest rates is certainly a positive.”
In Australia, sovereign bonds pared a collapse from Friday, when the nation’s central bank opted against defending its yield target.
The stress in China’s property sector also remains in focus. At least four developers defaulted on bonds last month. China Evergrande Group twice averted that fate by paying overdue coupons at the 11th hour.
Meanwhile, crude oil retreated as pressure mounts on OPEC+ to boost production when it meets on Thursday. China released state reserves of diesel and gasoline to ease shortages.
Here are some events to watch this week:
Earnings continue, including Airbnb, BMW, BP, Honda Motor, KKR, Moderna, Peloton, Pfizer, Pinterest, Qualcomm, SoftBank, Toyota Motor, UberChina Caixin manufacturing PMI, Markit manufacturing PMIs for a number of countries, MondayReserve Bank of Australia policy decision, TuesdayFOMC rate decision and Fed Chair news conference, U.S. factory orders, U.S. durable goods, WednesdayOPEC+ meeting on output, ThursdayBank of England announces interest-rate and bond-buying program decisions, ThursdayU.S. unemployment, nonfarm payrolls, Friday
For more market analysis, read our MLIV blog.
S&P 500 futures rose 0.3% as of 9:12 a.m. in Tokyo. The S&P 500 rose 0.2%Nasdaq 100 futures climbed 0.3%. The Nasdaq 100 rose 0.5%Japan’s Topix index jumped 1.6%South Korea’s Kospi rose 0.4%Australia’s S&P/ASX 200 added 0.4%Hang Seng futures fell 0.6% earlier
The Bloomberg Dollar Spot Index was steadyThe euro was at $1.1556The Japanese yen was at 114.23 per dollar, down 0.3%The offshore yuan was at 6.4070 per dollar
The yield on 10-year Treasuries added two basis points to 1.57%Australia’s 10-year bond yield fell 15 basis points to 1.94%
West Texas Intermediate crude fell 0.5% to $83.15 a barrelGold was at $1,781.63 an ounce, slipping 0.1%
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