(Bloomberg) -- Most Asian stocks rose Monday after the outcome of Japan’s election bolstered expectations for fiscal stimulus and as fresh all-time highs for U.S. shares encouraged some investor optimism.
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Equities jumped more than 1% in Japan, where Prime Minister Fumio Kishida’s Liberal Democratic Party defied forecasts by preserving its outright majority. Stocks slipped in Hong Kong and China. Data signaled economic weakness in China due to power shortages, surging commodity prices and Covid curbs. U.S. futures advanced following Friday records for the S&P 500 and Nasdaq 100.
U.S. Treasuries dipped and the gap between 5-year and 30-yields shrank. Short-term yields from Canada to Australia have jumped on bets that monetary authorities will have to hike interest rates to curb inflation. Traders are awaiting central bank meetings in the U.S., U.K. and Australia this week. The Federal Reserve is expected to scale back its bond-purchase program.
A gauge of the dollar was steady. In Australia, sovereign debt pared an epic Friday collapse. The rout was triggered by the central bank’s failure to defend a bond-yield target, spurring speculation of a looming policy shift.
Fixed-income market upheavals suggest investors anticipate a slowdown in the recovery from the pandemic as price pressures lead central banks pare back economic support. Supply-chain disruptions and an energy squeeze are fueling jumps in the cost of living. Global shares have so far shrugged off such risks and remain close to all-time peaks, supported by company earnings.
“Depending on where you are looking, you are getting very different stories on the outlook for global markets,” Kerry Craig, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “If you look at equities and the rally you are seeing, you think everything is OK. If you look at the bond market and how yields are moving, there’s obviously a lot more concern around inflation and policy normalization.”
While China’s purchasing managers’ indexes signaled weakness, other gauges indicated manufacturing activity elsewhere in Asia firmed last month.
The stress in China’s property sector also remains in focus. At least four developers defaulted on bonds last month. China Evergrande Group twice averted that fate by paying overdue coupons at the 11th hour.
Meanwhile, crude oil retreated as pressure mounts on OPEC+ to boost production when it meets on Thursday. Recent weakness in crude is a short-term pull back in an “otherwise intact bull market,” Goldman Sachs Group Inc. analysts wrote in a note, reaffirming a year-end Brent target of $90 a barrel.
Here are some events to watch this week:
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Earnings continue, including Airbnb, BMW, BP, Honda Motor, KKR, Moderna, Peloton, Pfizer, Pinterest, Qualcomm, SoftBank, Toyota Motor, Uber
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China Caixin manufacturing PMI, Markit manufacturing PMIs for a number of countries, Monday
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Reserve Bank of Australia policy decision, Tuesday
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FOMC rate decision and Fed Chair news conference, U.S. factory orders, U.S. durable goods, Wednesday
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OPEC+ meeting on output, Thursday
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Bank of England announces interest-rate and bond-buying program decisions, Thursday
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U.S. unemployment, nonfarm payrolls, Friday
For more market analysis, read our MLIV blog.
Stocks
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S&P 500 futures rose 0.2% as of 10:40 a.m. in Tokyo. The S&P 500 rose 0.2%
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Nasdaq 100 futures climbed 0.2%. The Nasdaq 100 rose 0.5%
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Japan’s Topix index jumped 1.4%
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South Korea’s Kospi rose 0.4%
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Australia’s S&P/ASX 200 added 0.6%
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Hong Kong’s Hang Seng index lost 1.4%
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China’s Shanghai Composite index shed 0.5%
Currencies
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The Bloomberg Dollar Spot Index was steady
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The euro was at $1.1555
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The Japanese yen was at 114.09 per dollar, down 0.1%
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The offshore yuan was at 6.4048 per dollar
Bonds
Commodities
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West Texas Intermediate crude fell 0.5% to $83.12 a barrel
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Gold was at $1,783.30 an ounce, slipping 0.1%
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