by (Bloomberg) — Asian equities continue a rally in global equities that continues to defy concerns about risks to economic growth and elevated interest rates. Oil rose sharply on a supply freeze from Saudi Arabia.
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Crude oil rose about 2% on a pledge to cut an additional 1 million barrels per day in July, pushing Saudi Arabia’s output to its lowest level in years.
Equity benchmarks in Japan and Australia rose more than 1% on Monday, while South Korea’s Kospi was up about 0.5%. Futures for Hong Kong pointed to gains in Chinese markets.
Contracts for the S&P 500 fell slightly in Asia after further gains Friday pushed the underlying measure to the brink of a bull market. A benchmark from MSCI Inc. stocks in developed and emerging markets are at their highest levels since May, despite growing concerns about an economic slowdown in China and the prospect of higher interest rates in the US.
US gains on Friday were fueled by big tech, options positioning and bets for a Fed to keep rates unchanged this month before a likely rise in July.
A mixed jobs report shaped bets on the Fed, with signs of slackening in the labor market in May despite a pick-up in hiring. That supported the argument by Fed Chairman Jerome Powell and other officials that they should take more time to assess incoming data and the evolving outlook before raising rates again.
Two-year government bond yields, which are more sensitive to impending central bank moves, rose by three basis points, contributing to a 16 basis point increase on Friday. Australia’s three-year government bond yields rose about 10 basis points following the move in Treasuries and ahead of a central bank interest rate decision Tuesday.
The euro, pound and Australian dollar fell, while the yen weakened above 140 against the greenback. A gauge of dollar strength was slightly higher.
As US stock prices rose on Friday, Wall Street’s “fear gauge” plummeted to pre-pandemic levels. The Cboe Volatility Index, or VIX, fell below 15 from an average of 23 over the past year.
Broadcom Inc. climbed after forecasting that sales linked to artificial intelligence will double this year.
“The impressive run for stocks continues to drive retail investors into the market,” said Mark Hackett, chief investment research officer at Nationwide. “Investors have been largely obsessed with the Fed, inflation and payrolls for the past three years, although the volatility surrounding those reports has dissipated, reflecting a less emotional market. This is bullish, as less reactivity is a sign of a healthy market.”
According to Quincy Krosby, chief global strategist at LPL Financial, the rise in stocks doesn’t mean the market isn’t facing headwinds.
Among the risks, she cites the potential fallout from the deluge of Treasury bills — about $1 trillion — that will be auctioned off as the U.S. Department replenishes its general account following a debt curtailment agreement. that could lead to a significant undermining of financial market liquidity, she noted.
Main events this week:
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China Caixin services PMI, Monday
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Eurozone S&P Global Eurozone Services PMI, PPI, Monday
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US Factory Orders, ISM Services, Monday
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ECB President Christine Lagarde will appear in the European Parliament on Monday
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Review decisions in Australia, Poland, Tuesday
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China forex reserves, trading, Wednesday
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US Commerce, Consumer Credit, Wednesday
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Canada tariff decision, Wednesday
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EIA crude oil inventory data, Wednesday
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Eurozone GDP, Thursday
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Review decisions in India, Peru, Thursday
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GDP of Japan, Thursday
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US wholesale inventories, first jobless claims, Thursday
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China PPI, CPI, Friday
Some of the major movements in markets:
Shares
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S&P 500 futures fell 0.1% as of 9:21 a.m. Tokyo time. The S&P 500 rose 1.4% on Friday
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Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.7%
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Euro Stoxx 50 futures were little changed
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Hang Seng Index futures up 1.1%
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Japanese Topix rose 1.1%
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Australian S&P/ASX 200 up 1.1%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro fell 0.1% to $1.0693
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The Japanese yen fell 0.2% to 140.15 per dollar
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The offshore yuan changed little at 7.1127 to the dollar
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The Australian dollar fell 0.2% to $0.6597
Cryptocurrencies
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Bitcoin fell 0.6% to $27,076.83
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Ether fell 1% to USD 1,885.27
Bonds
Raw materials
This story was created with the help of Bloomberg Automation.
–With help from Rita Nazareth.
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