Asian stocks are poised to start a fresh week higher after US shares held last week’s gain in a holiday-shortened session on Wall Street.
Futures contracts in Australia, Japan and Hong Kong point to an early rise when trading gets underway, while those in mainland China point to a loss. US stocks were little changed on Friday, holding a fourth straight week of gains while the VIX - Wall Street’s ‘fear gauge’ and a measure of equity volatility - fell to its lowest since January 2020.
The drop in volatility and bets the Federal Reserve could finally be done with raising interest rates have seen the S&P 500 Index climb 8.7% this month, on track for one of the best performances in the last century. Investors flocked into equities at the fastest pace in almost two years, according to Bank of America.
US stocks are likely to extend the rally but a “modest pullback would not surprise,” said Tony Sycamore, an analyst at IG Group in Sydney. “End of month, early December looks like a good candidate for a pullback to rebuild energy and to set up for the end of year fireworks.”
Read: Wall Street Goes All-In on Cross-Market Meltup as Bears Retreat
Australian and New Zealand bonds were little changed early Monday after Treasuries fell, with yields on benchmark 10-year notes six basis points higher Friday to 4.47%. Still, the Bloomberg US Treasury Index shifted earlier this month to a positive return for the year and many debt watchers see the pathway for a clear bond market revival.
Meantime, the dollar was steady after notching its first back-to-back weekly decline since July last week. The greenback may “remain heavy” for most of the week as funds managers adjust hedges and cash heads into developing economies, Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients.
“The backdrop of low volatility and expectations for a soft landing in the US economy supports portfolio capital flows into emerging markets,” they wrote. “That backdrop undermines the US dollar.”
Coming Up
This week, investors will be parsing Chinese activity data to gauge the health of the world’s second largest economy and assessing the fallout among property and shadow banking stocks after Chinese authorities said they recently opened criminal investigations into the money management business of Zhongzhi Enterprise Group Co.
Inflation readings in Australia and the Eurozone as well as personal consumption data in the US will offer clues to the rate outlooks in their respective central banks.
In earnings, Crowdstrike Holdings Inc. will underscore how businesses are prioritizing cybersecurity after recent high-profile corporate hacks, while Salesforce Inc. and Dell Technologies Inc. are expected to post slower sales growth as overall corporate expenditure tightens.
Traders will also be keeping an eye on gold and oil after Israel and Hamas signaled that a temporary cease-fire in Gaza could be extended beyond Monday to allow for the release of more hostages and prisoners. Meantime, OPEC+ looks close to resolving a dispute over output quotas that forced the group to postpone a pivotal meeting at the weekend.
Key events this week:
- China industrial profits, Monday
- ECB President Christine Lagarde appears in parliamentary committee, Monday
- Australia retail sales, Tuesday
- Taiwan GDP, Tuesday
- NATO foreign ministers meet, Tuesday
- Australia CPI, Wednesday
- Reserve Bank of New Zealand policy decision, Wednesday
- Bank of Thailand policy decision, Wednesday
- Eurozone economic confidence, Wednesday
- China non-manufacturing and manufacturing PMIs, Thursday
- Eurozone CPI, Thursday
- US PCE deflator, Thursday
- Dell Technologies earnings, Thursday
- China Caixin manufacturing PMI, Friday
- Indonesia inflation, Friday
- Eurozone manufacturing PMI, Friday
- Switzerland GDP, Friday
- Federal Reserve chairman Jerome Powell speaks, Friday
Some key moves in markets:
Stocks
- S&P 500 rose 0.1% on Friday
- S&P/ASX 200 futures rose 0.2%
- Nikkei 225 futures rose 0.4%
- Hang Seng futures rose 0.4%
- CSI 300 futures drop 0.7%
Currencies
- The euro was little changed at $1.0945 as of 6:53 a.m. Tokyo time
- The Japanese yen was unchanged at 149.44 per dollar
- The offshore yuan was little changed at 7.1490 per dollar
- The Australian dollar fell 0.1% to $0.6577
Cryptocurrencies
- Bitcoin fell 0.5% to $37,634.48
- Ether fell 0.4% to $2,076.36
Bonds
- The yield on 10-year Treasuries advanced six basis points to 4.47% on Friday
- Australia’s 10-year yield was little changed Monday at 4.55%
Commodities
- West Texas Intermediate crude fell 2% Friday to $75.54 a barrel
- Spot gold rose 0.4% to $2,000.82 an ounce
This story was produced with the assistance of Bloomberg Automation.
