(Bloomberg) — Stocks in Asia and US futures rose Monday as Beijing reopened further, helping soothe a fragile mood as inflation and rate hike concerns weigh. Oil gained.
Japan equities erased losses, while technology shares jumped in Hong Kong.
China advanced with the capital walking back Covid-19 restrictions. Australian stocks fell, bucking the trend, ahead of an expected second consecutive interest-rate increase Tuesday. S&P 500 and Nasdaq 100 futures rose.
Treasury yields stabilized.
Strong US hiring data for May suggested that the Federal Reserve won’t waver from its pace of steep interest-rate hikes to rein in price pressures. The next focus is consumer prices due this week, which can help gauge whether inflation has peaked.
A dollar gauge was steady.
Crude oil traded near $120 a barrel as shortage worries persist. Saudi Arabia raised prices for its biggest market of Asia by more than expected, and the US was considering allowing more sanctioned Iranian oil onto global markets to counter the drop in Russian supplies.
Copper hit the highest since April on China’s easing of virus measures.
Investors are fretting that a restrictive Fed could plunge the economy into recession, while China’s lockdowns to control virus outbreaks have chocked economic activity and snarled supply chains, adding to inflation worries.
The easing of Chinese lockdowns will help abate supply-chain pressures, while ramped up policy measures also boost optimism over China, according to Diana Mousina, a senior economist at AMP Capital.
Still, the nation’s services activity contracted more than expected in May amid the restrictions.
“Positive news around Chinese economic activity and cheaper equity valuations could offer value from a long-term investment perspective, but volatility will remain high in the short-term,” Mousina said in a note.
The US jobs report quelled some concern that the economy is slowing too sharply, but also strengthened the view that the Fed will keep hiking rates to tamp down on rising inflation.
Cleveland Fed President Loretta Mester said she would back a half-point hike in September if inflation is not retreating. Market-derived odds for a third 50-basis-point increase in September held steady near 85%.
The European Central Bank will this week announce an end to bond purchases and formally begin the countdown to an increase in borrowing costs in July, joining global peers tightening monetary policy in the face of hot inflation.
Elsewhere, the pound was steady amid risks around a confidence vote on British Prime Minister Boris Johnson’s leadership.
Key events to watch this week:
- Reserve Bank of Australia policy decision Tuesday
- World Bank’s “Global Economic Prospects” report Tuesday
- Reserve Bank of India rate decision Wednesday
- OECD Economic Outlook, a twice-yearly analysis of major global economic trends and prospects for the next two years.
Wednesday
- European Central Bank rate decision, Christine Lagarde briefing, Thursday
- China trade, new yuan loans, money supply, aggregate financing. Thursday
- U.S. CPI, University of Michigan consumer sentiment Friday
- China CPI, PPI Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of midday in Tokyo.
The S&P 500 fell 1.6% on Friday
- Nasdaq 100 futures rose 0.6%. The Nasdaq 100 fell 2.7%
- Topix index rose 0.1%
- Australia’s S&P/ASX 200 Index lost 0.4%
- Hang Seng Index rose 1.1%
- CSI 300 Index rose 1.1%
- Euro Stoxx 50 futures gained 0.6%
Currencies
- The Bloomberg Dollar Spot Index was steady
- The Japanese yen rose 0.2% to 130.60 per dollar
- The offshore yuan traded at 6.6554 per dollar
- The euro was at $1.0722
Bonds
- The yield on 10-year Treasuries was at 2.94%
- Australia’s 10-year bond yield was at 3.48%
Commodities
- West Texas Intermediate crude rose 0.8% to $119.82 a barrel
- Gold was at $1,854.41 an ounce
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