Asian Stocks March Higher as BOJ, Fed Week Begins: Markets Wrap
(Bloomberg) — Asian shares rose the most in more than two weeks, heading into a week of major central bank decisions and big tech earnings releases. The yen climbed.
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Benchmark indexes gained in markets from Australia to Japan and Hong Kong, tracking Friday’s strong showing on Wall Street as bets grew on Federal Reserve policy easing. US futures also marched higher Monday.
Chinese stocks bucked the trend amid a lack of strong growth stimulus, while an extended rally in the nation’s bond market sent the 10-year yield to a record low.
Monetary policy decisions in Japan, the US and the UK will take the center stage this week, after global markets were ravaged by the yen’s recent rally on expectations for the Bank of Japan to hike its key rate. Also in focus are earnings including Apple Inc., Amazon.com Inc and Microsoft Corp. following a stock rout sparked by an underwhelming start to the megacaps reporting season.
Spurred by wagers on monetary tightening in Japan, the yen advanced against all its Group of 10 peers Monday. The long-beleaguered currency has clawed back some of its losses in recent sessions and is now on course to post its best monthly performance versus the dollar this year.
“Watch for the trifecta of central bank policy decisions, namely the FOMC which is likely to remain static but hint at cutting rates soon,” Oversea-Chinese Banking Corp. analysts wrote. The BOJ is likely to announce quantitative tightening, while the Bank of England “is tipped to enact its first rate cut since 2020.”
The Fed is likely to signal its plans to cut in September at the conclusion of its meeting on Wednesday, according to economists surveyed by Bloomberg News, a move they say will kick off reductions each quarter through 2025. Money markets are fully pricing a September move, with a chance of two more by year-end, according to swaps data compiled by Bloomberg.
“While the July FOMC meeting is likely too soon to initiate the cut, it is not too early to begin preparations for a rate reduction in September,” Stephen Gallagher, an economist at Societe Generale, wrote in a note to clients.
Treasury 10-year yields declined two basis points to 4.18%.
Just hours before the Fed’s decision, the Bank of Japan is expected to release details of plans to cut monthly bond purchases at the conclusion of its two-day policy meeting on Wednesday, while most economists also see the risk of a rate hike. The yen climbed 2.4% against the dollar last week as traders priced a more than two-thirds chance of a 10 basis point hike, causing a selloff in risk-sensitive developed and emerging market currencies and helping send the Nikkei 225 Index into a technical correction.
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Elsewhere in Asia, Chinese factory activity data is due this week, providing further insight into a surprise People’s Bank of China rate cut to boost a flailing economy. Australian inflation data will also be keenly awaited as investors and analysts debate whether the nation’s central bank will hike its key rate as early as next week.
Oil steadied near a six-week low ahead of a key OPEC+ meeting this week, with analysts divided over whether the group will proceed with plans to boost supplies next quarter. While the coalition is seeing to restore supplies it’s withheld from the market for two years in a bid to prop up prices, sputtering economic growth in key consumer China, and new oil supplies from across the Americas, threaten to derail the plans.
Key events this week:
McDonald’s, Heineken earnings, Monday
Microsoft earnings, Tuesday
European inflation and growth data, Tuesday
Australia CPI, Wednesday
Bank of Japan policy decision, Wednesday
Meta Platforms earnings, Wednesday
Fed interest rate decision and news conference by Chair Jerome Powell, Wednesday
Bank of England sets official interest rate, Thursday
Amazon, Apple earnings, Thursday
US tariffs are due to increase on an array of Chinese imports on Thursday, including EVs, batteries, chips and medical products
South Korea CPI, Friday
US employment, factory orders, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.4% as of 12:27 p.m. Tokyo time
Nikkei 225 futures (OSE) rose 2%
Japan’s Topix rose 1.9%
Australia’s S&P/ASX 200 rose 0.8%
Hong Kong’s Hang Seng rose 1.7%
The Shanghai Composite was little changed
Euro Stoxx 50 futures rose 0.5%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0864
The Japanese yen rose 0.2% to 153.52 per dollar
The offshore yuan was little changed at 7.2624 per dollar
Cryptocurrencies
Bitcoin rose 2.2% to $69,470.09
Ether rose 2.8% to $3,349.18
Bonds
Commodities
West Texas Intermediate crude was little changed
Spot gold rose 0.3% to $2,393.67 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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