(Bloomberg) — Most Asian stocks rose with U.S. equity futures Monday as benchmark Treasury yields steadied in a week set to be dominated by the Federal Reserve policy meeting.
Ten-year Treasury yields were still around one-year highs as vaccinations and the $1.9 trillion U.S. stimulus keep the spotlight on inflation risk amid an economic recovery. Australian and New Zealand 10-year rates rose Monday.
Equities advanced in Japan and Hong Kong, while China pared a slide after some stronger-than-expected economic data. S&P 500 and Nasdaq 100 futures gained. The S&P 500 closed higher Friday amid rallies in financial and industrial shares. The Nasdaq 100 gauge slid and the Dow Jones Industrial Average added to its all-time high.
In Hong Kong, Xiaomi Corp. surged after a temporary halt to a U.S. ban, while Tencent Holdings Ltd. edged back on expectations that it faces increased regulatory supervision. Elsewhere, oil climbed and Bitcoin traded around $60,000 after surpassing $61,000 on the weekend in a meteoric rise.
Markets are preoccupied with rising long-term borrowing costs and their implications for reflation trades and the rotation in the stock market from growth to value shares. The Fed decision later in the week is one of a slew due from central banks globally.
“Despite elevated valuations across both equities and credit, it’s very hard not to be positive on risk assets in this environment,” Patrik Schowitz, global multi-asset strategist at JPMorgan Asset Management, said in a note. “Yet the change of pace in markets last week maybe also suggests a lot is priced already.”
Treasury Secretary Janet Yellen said U.S. inflation risks remain subdued despite the Biden administration stimulus. A strong recovery from the Covid-19 recession is likely to prompt Fed Chair Jerome Powell and his colleagues to lift interest rates in 2023, but that isn’t going to show up in their forecasts this week, a Bloomberg survey of economists showed.
Fed to Hike Rates in 2023 But Dots Won’t Show It, Economists Say
On the virus front, more countries have suspended the use of AstraZeneca Plc’s vaccine after some concerns around side effects. Most of Italy will return to lockdown on Monday amid a resurgence in infections.
These are some key events this week:
China industrial production and retail sales are due Monday.Fed Chair Jerome Powell will likely reaffirm his no-tightening policy stance at the Fed policy meeting Wednesday.Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.
These are the main moves in markets:
Stocks
S&P 500 futures rose 0.4% as of 11:11 a.m. in Tokyo. The S&P 500 Index rose 0.1%.Nasdaq 100 futures rose 0.5%. The Nasdaq 100 Index fell 0.9%.Japan’s Topix index rose 0.8%.Australia’s S&P/ASX 200 Index rose 0.3%.South Korea’s Kospi index was little changed.Hong Kong’s Hang Seng Index added 1.2%.China’s CSI 300 Index fell 0.8%.
Currencies
The yen was at 109.06 per dollar.The offshore yuan was at 6.5008 per dollar.The Bloomberg Dollar Spot Index was little changed.The euro traded at $1.1959, up 0.1%.
Bonds
The yield on 10-year Treasuries held at 1.62%.Australia’s 10-year bond yield jumped seven basis points to 1.78%.
Commodities
West Texas Intermediate crude rose 1.1% to $66.30 a barrel.Gold was at $1,728.43 an ounce, up 0.1%.
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