(Bloomberg) – A gauge of Asian stocks rose along with U.S. and European stock futures while Chinese stocks fell, weighed down by a modest economic growth target that diminishes the prospect of further stimulus from Beijing.
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Gains in the region were led by Japan and South Korea, where benchmarks rose around 1%, following Wall Street’s lead on Friday. US equities ended the week on a positive note, driven by speculation that the Federal Reserve will not raise interest rates beyond previously expected peak levels.
Shares fluctuated in Hong Kong and fell around 0.2% in Shanghai as investors digested the implications of China’s growth target around just 5%. That set the tone for commodities, from iron ore to copper, which slid along with oil on expectations that demand could be weaker than some investors had expected.
Yields on government bonds fell in Australia and New Zealand, following movements in Treasuries on Friday, when the rate on US 10-year debt fell below the closely watched level of 4%. Treasuries were little moved Monday in Asia. A gauge of dollar strength fluctuated after a small rise earlier.
Investors will continue to closely monitor the movements of Chinese equities for indications of the resilience of the recent bullish momentum seen in the country and more broadly in Asia. A gauge of Asian stocks rebounded 1.5% last week after falling nearly 6% in February.
A rally in the S&P 500 on Friday helped end a three-week losing streak while the Nasdaq 100 marked its best day since early February. Sentiment remained bullish despite a report showing resilience in the services sector, as some investors bet the impact of Fed hikes on the economy would be delayed. A measure of the prices paid by service providers showed that costs were rising at a slower rate, which was applauded by traders.
“Rates are going to be higher for longer, so we don’t think the strength you’re seeing in the equity market will be sustainable in the second half of the year,” said senior equity strategist Nadia Lovell. from UBS Global Wealth Management. , said in an interview with Bloomberg Television. “We think you’re going to see a drag on the economy that will have implications for corporate earnings.”
This week brings a wealth of key economic data and events for investors to consider. In Asia, eyes remain on the National People’s Congress in Beijing for any further policy announcements and any details that may set the tone for how market-friendly – or tough – regulation will be until 2023. The decision on Australia’s interest rates will be finalized on Tuesday and Friday. comes the latest policy decision by the Bank of Japan under current Governor Haruhiko Kuroda.
Globally, traders will be watching the US Nonfarm Payrolls report to see if the economy can handle more rate hikes. Last week’s data showed continued resilience in the U.S. labor market, supporting the case for the Fed to stick to its tightening policy, a theme that had driven nearly all main assets in the red in February. Investors will also be glued to their screens as Fed Chairman Jerome Powell speaks before Senate and House committees this week.
Key events this week:
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US factory orders, durable goods, Monday
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U.S. wholesale inventories, consumer credit, Tuesday
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Fed Powell’s semi-annual monetary policy report to the Senate Banking Committee, Tuesday
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Australian rate decision, Tuesday
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Eurozone GDP, Wednesday
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US MBA Mortgage Applications, ADP Job Change, Trade Balance, JOLTS Job Openings, Wednesday
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Fed Chairman Powell’s semi-annual monetary policy report to the House Financial Services Committee on Wednesday
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Canadian rate decision, Wednesday
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EIA Crude Oil Inventories, Wednesday
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CPI China, PPI, Thursday
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US Challenger job cuts, initial jobless claims, change in household net worth, Thursday
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Bank of Japan interest rate decision on Friday
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U.S. Nonfarm Payrolls, Unemployment Rate, Monthly Budget Statement, Friday
Some of the major movements in the markets:
Shares
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S&P 500 futures rose 0.1% at 1:43 p.m. Tokyo time. The S&P 500 rose 1.6% on Friday
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Nasdaq 100 futures rose 0.3%. The Nasdaq 100 rose 2% on Friday
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Japan’s Topix index rose 0.8%
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Australia’s S&P/ASX 200 index rose 0.6%
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Hong Kong’s Hang Seng has changed little
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The Shanghai Composite fell 0.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0645
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The Japanese yen rose 0.2% to 135.58 per dollar
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The offshore yuan fell 0.3% to 6.9179 per dollar
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The Australian dollar fell 0.2% to $0.6757
Cryptocurrencies
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Bitcoin fell 0.6% to $22,357.44
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Ether fell 0.7% to $1,561.23
Obligations
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The yield on 10-year Treasury bills fell one basis point to 3.94%
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Japan’s 10-year yield was little changed at 0.50%
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Australia’s 10-year yield fell 13 basis points to 3.77%
Goods
This story was produced with assistance from Bloomberg Automation.
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