Asian stocks looked set to start the week higher after their U.S. peers chalked fresh records Friday in a broad-based rebound. The dollar was steady.
Futures pointed higher in Japan, Australia and Hong Kong. U.S. contracts were little changed. The S&P 500 finished last week at all-time highs as investors continued to bet that global growth remains on track despite new Covid-19 variants. China’s central bank cut the amount of cash most banks must hold in reserve, underpinning gains, and the government proposed new rules on companies listing overseas.
Treasuries snapped an eight-session rally that saw 10-year yields tumble as low as 1.25% in a volatile week. They will remain in focus amid new supply coming to the market this week, as well as key U.S. inflation data and Federal Reserve Chair Jerome Powell’s semi-annual appearance before Congress.
The euro was little changed after European Central Bank President Christine Lagarde told investors to prepare for new guidance on monetary stimulus in 10 days. Oil was steady after its first weekly loss in seven amid an OPEC+ dispute over a production increase.
Investors turn their attention this week to the second-quarter earnings season in order to gauge whether corporate profitability can support equity valuations. Equities and bonds have rallied amid a decline in long-term interest rates and inflation expectations as central banks aren’t rushing to pull back stimulus that has helped a recovery from the pandemic.
“There does seem to be a complacency that Goldilocks is not only alive and well, but that it’s getting stronger by the day,” Simon Ballard, First Abu Dhabi Bank chief economist, said on Bloomberg Television. “Unfortunately, it has to be recognized that going forward, the longer that rates remain where they are, the more that we look towards tapering, the more severe and acute could be the reaction.”
Meanwhile, tension between the U.S. and China continues to bubble. Washington added 34 Chinese entities to its economic blacklist over alleged human rights abuses and high-tech surveillance in Xinjiang.
Here are some events to watch this week:
- Bank of America, BlackRock, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley are among firms starting the U.S. earnings season
- A closely-watched inflation metric -- the June U.S. consumer price index -- will offer insight into the inflationary pressures Tuesday
- The Reserve Bank of New Zealand’s latest interest rate policy Wednesday
- Bank of Korea monetary decision Thursday
- China second-quarter GDP, key economic indicators Thursday
- Federal Reserve Chair Jerome Powell appears before the Senate Banking Committee to deliver the semi-annual Monetary Policy Report to Congress Thursday
- Bank of Japan interest rate decision Friday
These are some of the main moves in financial markets:
Stocks
- S&P 500 futures were little changed as of 7:35 a.m. in Tokyo. S&P 500 rose 1.1%
- Nasdaq 100 futures rose 0.1%. Nasdaq 100 rose 0.7%
- Nikkei 225 futures climbed 1%
- Australia’s S&P/ASX 200 Index futures rose 1.1%
- Hang Seng futures rose 1.7% earlier
Currencies
- The Japanese yen was little changed at 110.19 per dollar
- The offshore yuan was little changed at 6.4808 per dollar
- The Bloomberg Dollar Spot Index fell 0.4% Friday
- The euro was little changed at $1.1869
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 1.36% on Friday.
Commodities
- West Texas Intermediate crude rose 0.4% to $74.85 a barrel
- Gold traded at $1,807.82 an ounce
— With assistance by David Wilson