(Bloomberg) — Asian stocks are expected to gain in early trading, following their U.S. counterparts on Friday, as expectations for Federal Reserve rate cuts were strengthened following the easing of the Fed’s preferred inflation measure. the central bank.
Most read on Bloomberg
Stock futures in Australia, Japan and Hong Kong point to higher openings on Monday. US contracts were little changed after the S&P 500 rose 0.8% in its previous session, following a late rise amid a rotation from technology stocks to other sectors.
The gain follows the best month for Asian stocks since last March, helped by signs of stabilization in China’s economy and a weaker dollar as the Fed bets on an interest rate cut this year. But with valuations looking stretched, markets are likely to be volatile as traders assess the outlook for central bank policy, while geopolitical tensions around the Middle East and the US election are left to simmer, according to AMP Ltd.
“We continue to see further gains in stocks this year as disinflation continues, central banks eventually cut interest rates, and recession is averted or moderated,” said Shane Oliver, chief economist and head of investment strategy at AMP in Sydney. “But the risks of a deeper correction, beyond that seen in April, have increased.”
Oil fell in early trading after OPEC+ extended its production cuts in a bid to shore up a fragile market. Although the deal exceeded market expectations, it also reverses October’s supply cuts, sooner than some OPEC observers expected.
Elsewhere, elections in India and Mexico are expected to set the tone for emerging markets. Indian stocks, bonds and the rupee are poised to rise on Monday after exit polls indicated a resounding victory for Prime Minister Narendra Modi’s party, while the Mexican peso was trading higher in early trading. session while the ballot boxes were still open.
Follow Bloomberg’s Mexico election live blog here for the latest results.
The dollar was stable at the start of the session. U.S. Treasuries rose Friday as the Fed’s preferred inflation measure, the basic price gauge of personal consumption expenditures, met estimates and posted the smallest increase this year. Inflation-adjusted consumer spending fell an unexpected 0.1%, dragged down by lower spending on goods and spending on services. Wage growth, the main driver of demand, has moderated.
“While this is unlikely to be enough to justify an imminent Fed rate cut, we believe recent data continues to support our soft landing scenario,” wrote Solita Marcelli, chief investment officer for Americas within the wealth management unit of UBS Group AG. a note. “This should allow the US central bank to begin easing policy later this year, most likely at its September meeting, in our view.”
Read more: Key drivers of U.S. consumer spending lose steam in one fell swoop
Meanwhile, the $12 billion sale of Saudi Aramco shares closed shortly after trading opened on Sunday, a boon for the government as it seeks funds to help it to finance a massive economic transformation plan. Although it was not immediately clear how much of the demand came from overseas, the order book reflected a mix of local and foreign investors, people familiar with the matter told Bloomberg News.
This week, traders will closely monitor inflation figures from emerging markets, including Indonesia, South Korea and Chile, as well as growth data from Australia and Europe. Data on economic activity is also expected in Europe, as well as the US jobs report.
Some of the main market movements:
Actions
S&P 500 futures were little changed as of 7:26 a.m. Tokyo time
Hang Seng futures rose 0.4%
S&P/ASX 200 futures rose 0.5%
Nikkei 225 futures rose 0.6%
Currencies
The euro was little changed at $1.0849
The Japanese yen was little changed at 157.26 per dollar.
The offshore yuan was unchanged at 7.2630 per dollar.
The Australian dollar was little changed at $0.6651.
Cryptocurrencies
Bitcoin little changed at $67,805.20
Ether little changed at $3,787.91
Obligations
Raw materials
West Texas Intermediate crude fell 0.3% to $76.80 a barrel
Spot gold fell 0.2% to $2,323.82 an ounce
This story was produced with the help of Bloomberg Automation.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
