(Bloomberg) — Asian stocks are poised for early gains Monday, tracking US shares higher into a week that includes Federal Reserve boss Jerome Powell’s congressional testimony and China’s National People’s Congress.
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Equity futures in Australia, Japan, Hong Kong and mainland China all climbed on Friday as the S&P 500 hit yet another fresh record. The yield on policy sensitive two-year Treasuries fell nine basis points to 4.53% following weaker than expected activity data and cautious comments from Fed officials.
Oil will be closely watched when it reopens Monday after OPEC+ extended its 2 million barrels of oil a day supply cutbacks to the middle of the year, in a bid to avert a global surplus and shore up prices. US crude hit $80 a barrel for the first time in almost four months on Friday.
The rally in markets will likely hinge on US jobs data and Powell’s testimony this week as bets for the start of the Fed’s easing cycle were refined amid recent data indicating a resilient US economy. Swaps traders now see the first cut in July, compared with the May estimate they were pricing at the beginning of last month, according to data compiled by Bloomberg.
“We don’t expect the chair to stray very far from the Fed’s recent messaging — officials are in a “wait-and-see” mode as there’s still a lot of ambiguity in the data,” John Briggs, global head of desk strategy at NatWest Markets wrote in a note. Government bond yields “have pushed toward their highs of recent ranges, and we think further large corrections towards higher yields is a lot less likely from here.”
The stock rally is showing little signs of slowing as US corporate earnings grew nearly 8% in the fourth quarter, helping offset macroeconomic uncertainty. Meantime, the frenzy around artificial-intelligence has blindsided Wall Street forecasters, spurring a race among strategists to keep up with a stock market rally that’s already blowing past their expectations when 2024 began.
Bank of America ratcheted up its forecast for the S&P 500 to 5,400 by year-end amid a surprising profit margin resilience, Savita Subramanian wrote in a note to clients.
In Asia, Chinese equities and the yuan will be in focus ahead of the 14th National People’s Congress, an annual parliamentary gathering in Beijing, as markets await more stimulus measures to aid a soft economy. A cut to key mortgage rates and encouraging state funds to buy shares have done little to spur confidence as policy makers battle a property crisis, stubborn deflation and angry retail investors caught in a $7 trillion stock rout.
Read More: Xi’s One-Man Rule Over China’s Economy Is Spurring Unrest
Elsewhere this week, traders will be keeping an eye on Tokyo inflation, Australian growth data and a policy decision from the European Central Bank. The so-called Super Tuesday Republican and Democratic party primary votes, US jobs data and earnings from US consumer discretionary stocks are also due.
“The strength of the consumer is a key factor that helped avoid a recession that looked likely,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
Key events this week:
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Japan capital spending, Monday
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ECB Governing Council member Robert Holzmann speaks, Monday
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Tokyo CPI, Tuesday
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China Caixin services PMI, Tuesday
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China kicks off its 14th National People’s Congress, Tuesday
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Eurozone S&P Global Services PMI, PPI, Tuesday
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More than a dozen US states hold Republican and Democratic primaries, Tuesday
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Australia GDP, Wednesday
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UK Chancellor Jeremy Hunt unveils annual budget, Wednesday
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Eurozone retail sales, Wednesday
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Fed Chair Jerome Powell testifies before House committee, Wednesday
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Canada rate decision, Wednesday
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China trade, forex reserves, Thursday
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BOJ board member Junko Nakagawa speaks, Thursday
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ECB rate decision, Thursday
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Fed Chair Jerome Powell testifies before Senate committee, Thursday
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Eurozone GDP, Friday
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US nonfarm payrolls, unemployment, Friday
Key moves in markets:
Currencies
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The Japanese yen was little changed at 150.09 per dollar as of 7:07 a.m. in Tokyo
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The euro was little changed at $1.0840
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The offshore yuan was little changed at 7.2099 per dollar
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The Australian dollar was little changed at $0.6523
Stocks
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S&P/ASX 200 futures rose 0.1%
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Nikkei 225 futures rose 0.5%
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Hang Seng futures rose 0.2%
Bonds
Cryptocurrencies
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Bitcoin was little changed at $62,888.67
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Ether was little changed at $3,477.50
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jessica Menton.
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