(Bloomberg) -- Asian stocks started the week higher after their U.S. peers chalked fresh records and Treasury yields stabilized after jumping Friday.
Shares in Japan outperformed and Hong Kong also rose. Australia advanced despite a prolonged lockdown in the largest city, Sydney, as virus cases continue to rise. U.S. futures fluctuated. 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.
Chinese assets found support after the central bank cut the amount of cash most banks must hold in reserve to buttress economic growth. Stocks gained, with the liquidity-sensitive ChiNext increasing as much as 3.9% to the highest since June 2015. Chinese dollar bonds climbed as investment-grade spreads tightened. The offshore yuan edged higher.
Treasuries snapped an eight-session rally Friday 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 dollar inched up against major peers.
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 toward tapering, the more severe and acute could be the reaction.”
Elsewhere, 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.
For more market commentary, follow the MLIV blog.
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 seasonA closely-watched inflation metric -- the June U.S. consumer price index -- will offer insight into the inflationary pressures TuesdayThe Reserve Bank of New Zealand’s latest interest rate policy WednesdayBank of Korea monetary decision ThursdayChina second-quarter GDP, key economic indicators ThursdayFederal Reserve Chair Jerome Powell appears before the Senate Banking Committee to deliver the semi-annual Monetary Policy Report to Congress ThursdayBank of Japan interest rate decision Friday
These are some of the main moves in financial markets:
Stocks
S&P 500 futures dipped 0.1% as of 11:36 a.m. in Tokyo. S&P 500 rose 1.1%Nasdaq 100 futures were little changed. Nasdaq 100 rose 0.7%Topix index climbed 2.1%Australia’s S&P/ASX 200 Index rose 0.8%Kospi index gained 0.9%Hang Seng Index gained 0.4%Shanghai Composite Index added 0.8%. CSI 300 Index rose 1.4% Euro Stoxx 50 futures added 0.1%
Currencies
The Japanese yen was little changed at 110.16 per dollarThe offshore yuan rose 0.1% to 6.4753 per dollarThe Bloomberg Dollar Spot Index rose 0.1%The euro was little changed at $1.1873
Bonds
The yield on 10-year Treasuries held around 1.36% after jumping seven basis pointsThe yield on 10-year Australian bonds fell two basis points to 1.34%
Commodities
West Texas Intermediate crude was steady at $74.51 a barrelGold traded at $1,806.40 an ounce
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