(Bloomberg) — Asian equity markets are eyeing a strong open as China returns from a three-day holiday and Friday’s softer-than-expected US jobs report revive bets the Federal Reserve will cut rates this year.
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US stock futures edged higher in early trading after the S&P 500 rose 1.3% in its previous session, while contracts in Australia and Hong Kong point to gains on Monday. A gauge of Chinese shares listed on the Nasdaq rose 5.5% last week, pointing to a strong open when mainland markets reopen. Japanese markets are closed for a holiday.
The positive sentiment comes after global stocks rose for a second week. US Treasuries rallied on Friday following the payrolls release, and a cooldown in wages appeased investors worrying about “stagflation” or a recession. Instead, the print gave fodder to the believers in an economy that is gradually slowing and would allow a data-dependent Fed to start easing policy later this year. Australian and New Zealand bonds also rose on Monday.
A litany of weaker-than-estimated data points last week — from jobs to services and manufacturing — sent the US version of Citigroup’s Economic Surprise Index to the lowest since February 2023. The gauge measures the difference between actual releases and analyst expectations. Nonfarm payrolls advanced 175,000 in April, the smallest gain in six months.
“The market has gained greater confidence that the US economy is not indeed overheating,” said Chris Weston, head of research at Pepperstone Group Ltd. in Melbourne. “Conviction levels may still be low, but the platform is in place for risky assets to move higher this week, notably if truce talks in Gaza gain real traction.”
Oil rose in early trading after Israel closed the Kerem Shalom humanitarian crossing into Gaza on Sunday following a rocket barrage fired by Hamas, in an incident that could derail weeks-long delicate hostage and cease-fire negotiations. Saudi Arabia lifted the price it sells crude to Asia as it attempts to tighten the oil market.
Traders will also be mindful of a swath of central bank meetings this week, led by a likely hawkish Reserve Bank of Australia on Tuesday following stronger-than-expected inflation data last month. Chinese activity data as well as inflation readings in key emerging markets are also due.
Some key events this week:
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China Caixin services PMI, Monday
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Eurozone S&P Global Services PMI, PPI, Monday
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Australia rate decision, Tuesday
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Eurozone retail sales, Tuesday
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UBS earnings, Walt Disney, BP earnings, Tuesday
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Minneapolis Fed President Neel Kashkari speaks, Tuesday
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Brazil rate decision, Wednesday
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Sweden rate decision, Wednesday
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Toyota earnings, Wednesday
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China trade, Thursday
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Malaysia rate decision, Thursday
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Mexico CPI, rate decision, Thursday
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UK BOE rate decision, Thursday
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Canada unemployment, Friday
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UK industrial production, GDP, Friday
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Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 8:14 a.m. Tokyo time
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Hang Seng futures rose 0.6%
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S&P/ASX 200 futures rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0762
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The Japanese yen was little changed at 153.20 per dollar
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The offshore yuan was little changed at 7.1953 per dollar
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The Australian dollar was little changed at $0.6614
Bonds
Cryptocurrencies
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Bitcoin rose 0.3% to $63,906.32
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Ether was little changed at $3,137.9
Commodities
This story was produced with the assistance of Bloomberg Automation.
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