(Bloomberg) — Asian stocks climbed Monday, helped by a rally in Japan, with traders also weighing the resilience of the pandemic recovery to an energy crunch and the prospect of tighter monetary policy to fight inflation.
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Japanese shares were boosted by a drop in the yen and Prime Minister Fumio Kishida’s comments that he isn’t considering changes to the country’s capital-gains tax at present. Equities in Hong Kong and China also climbed. U.S. futures were in the red. U.S. stocks declined Friday after jobs growth data fell significantly short of expectations but also showed a jump in earnings.
Wage gains and a surge in energy costs highlight price pressures that are adding to the case for tighter monetary policy. The Federal Reserve is expected to proceed with a tapering of bond purchases in coming weeks, and Bank of England officials moved to reinforce signals of an imminent rise in interest rates to curb inflation. The pound strengthened.
Treasury futures fell, after the 10-year U.S. Treasury yield advanced past 1.6% on Friday. There’s no cash Treasuries trading Monday due to a U.S. holiday. West Texas Intermediate crude was around the highest since 2014. A gauge of the dollar was steady.
Aside from central bank tightening, investors are also braced for upcoming reports on third-quarter company profits and monitoring the debt woes and slowdown in China’s property sector.
“We do have this environment where we have expectations for inflation rising and expectations for growth falling but I don’t think we are going to be in an environment where we see stagflation becoming entrenched,” Kerry Craig, global market strategist at J.P.Morgan Asset Management, said on Bloomberg Television.
Goldman Sachs Group Inc. economists cut their forecasts for U.S. growth this year and next, blaming a delayed recovery in consumer spending. The declines were mostly offset by upgrades to projections for the following two years.
Elsewhere, tension over Taiwan is simmering. President Tsai Ing-Wen said the island is facing “unprecedented challenges” and will defend its sovereignty, pushing back after Chinese leader Xi Jinping declared a day earlier that unification will be achieved. Taiwan’s markets are closed for a holiday.
In cryptocurrencies, Bitcoin edged down to trade around $55,000.
Here are a few events to watch this week:
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IMF/World Bank annual meetings start in Washington. Though Oct. 17
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Bank of Korea policy decision and briefing. Tuesday
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Atlanta Fed President Raphael Bostic speaks on inflation. Tuesday
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U.S. FOMC minutes and CPI. Wednesday
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JPMorgan Chase & Co. kicks off the reporting season. Wednesday
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China PPI, CPI. Thursday
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U.S. initial jobless claims, PPI. Thursday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.1% as of 10:40 a.m. in Tokyo. The S&P 500 fell 0.2%
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Nasdaq 100 futures lost 0.2%. The Nasdaq 100 declined 0.5%
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Japan’s Topix index rose 1.6%
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Australia’s S&P/ASX 200 shed 0.4%
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Hang Seng Index rose 2%
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Shanghai Composite Index rose 0.5%
Currencies
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The Japanese yen was at 112.37 per dollar, down 0.1%
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The offshore yuan traded at 6.4386 per dollar
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The Bloomberg Dollar Spot Index dipped 0.1%
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The euro was at $1.1579
Bonds
Commodities
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West Texas Intermediate crude rose 1.6% to $80.62 a barrel
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Gold was at $1,760.75 an ounce, up 0.2%
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