By Wayne Cole
SYDNEY (Reuters) – Asian stocks rallied to a relief rally on Monday, while record highs on Wall Street and the assassination of politicians in China have helped calm some of the recent nerves over global growth, too. if there are many potential pitfalls ahead this week.
In the U.S., inflation data could provide a shock ahead of testimony from Federal Reserve Chairman Jerome Powell on Wednesday and Thursday, where markets will be hyper-sensitive to any talk of early decline.
Earnings season also begins with JP Morgan, Goldman, Citigroup (NYSE 🙂 and Wells Fargo (NYSE 🙂 among those who report.
China released figures this week on economic growth, trade, retail sales and industrial production amid concerns it may have undergone given the sudden slowdown in policy last week.
“Expectations around China’s outlook have risen in the past month due to some disappointing partial data greatly exacerbated by the prospect of exiting peak growth since the pandemic’s recovery,” analysts said in a statement. Westpac.
“However, annual growth is still projected to be above 8.0% and, through the second half of 2022, the quarterly growth rate should reverse the trend.”
For now, investors were happy that last week’s bearishness surge turned around New York, sending Wall Street higher and tempering the bull well.
On Monday, MSCI’s broader index of Asia-Pacific stocks outside of Japan gained 0.7%, after falling 2.3% last week.
it fell 2.2%, away from a two-month high on Friday, while South Korea added 0.9%. Chinese blue chips increased by 1.1%.
Nasdaq futures and were a fraction easier after their recovery Friday. EUROSTOXX 50 futures remained stable, while futures fell 0.2%.
Yields on U.S. 10-year notes held at 1.35%, staying up 1.25% on Friday after eight straight sessions of price gains. [US/]
“The U.S. rate hike in July was remarkable,” analysts at NatWest Markets observed. “No driver perfectly explains the move … but fears of global growth and the Covid Delta variant had raised new doubts about inflation.”
That risk aversion shot had also sustained the safe haven of the US dollar, until it hit some profit taking Friday. It was last at 92,190 on a basket of currencies, after hitting a three-month high of 92,844 last week.
The safe haven yen also lost some ground at 110.16 per dollar, while the euro stood at $ 1.1869 from last week’s low at $ 1.1780.
Christine Lagarde, president of the European Central Bank, took the markets by surprise on Monday, saying the bank will change its policy guidance at its next meeting and show it is serious about reviving inflation.
The ECB’s new strategy allows it to tolerate inflation above its 2% target when rates are close to the bottom.
The general risk index helped gold rise higher last week and traded at $ 1,800 an ounce compared to its June low of $ 1,749.
Oil prices settled Monday after the end of a volatile week with a rebound as U.S. inventories tightened. Traders are still uncertain about the prospects for supply after OPEC’s discussions on the restrictions have broken down.
it was the last drop of 18 cents to $ 75.37 a barrel, while it dropped 16 cents to $ 74.40.