Stocks Set to Climb After U.S. Rally on Dip Buying: Markets Wrap

(Bloomberg) -- Asian stocks look set to rise Monday after bargain hunters spurred a U.S. rally, with traders also weighing growth risks and awaiting the Jackson Hole symposium for clues on the Federal Reserve’s policy outlook.

Futures advanced in Japan, Australia and Hong Kong, while U.S. contracts edged higher. The S&P 500 and tech-heavy Nasdaq 100 rose at the end of last week. Beijing’s regulatory crackdown saw Chinese shares listed in the U.S. suffer their longest streak of weekly losses in a decade despite a climb on Friday. 

The dollar held its recent advance on haven demand due to the impact of the delta virus variant. Treasuries were little changed last week ahead of the Jackson Hole symposium from Thursday, which may offer insights into how the Fed plans to taper bond purchases. 

The weakness in commodities such as crude oil remains in focus. Crude edged up and was trading just above $62 a barrel. Bitcoin was close to retaking $50,000 for the first time since mid-May.

The delta variant and the prospect of reduced central bank support have sowed doubts about the world economic recovery and led to a pause in the global equity rally. Dallas Fed President Robert Kaplan said he’s open to adjusting his view that the Fed should start tapering its asset-purchase program sooner rather than later if the delta strain persists and hurts economic progress.

“Markets react to interest-rate hikes much more than tapering and we expect a pause between tapering and the first hike, suggesting liftoff in 2023 and not before,” Esty Dwek, head of global market strategy at Natixis Investment Managers, wrote in a note. The pandemic is still with us and growth will soften into 2022, she added.

Meanwhile, Treasury Secretary Janet Yellen endorsed Jerome Powell for a second term as Fed chair, a move that could reduce uncertainty about the path for monetary policy amid risks from inflation and the coronavirus.

Australia and New Zealand are reviewing their strategies of eliminating Covid-19 infections, with Australian Prime Minister Scott Morrison said it’s highly unlikely his country will ever return to zero cases.

Here are some events to watch this week:

• U.S. Markit manufacturing PMI and existing home sales Monday
• Bank of Korea policy decision; briefing by Governor Lee Ju-yeol Thursday
• Fed officials attend the Jackson Hole Economic Policy Symposium from Thursday through Saturday
• U.S. GDP, initial jobless claims Thursday
• July U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 8:40 a.m. in Tokyo. The S&P 500 rose 0.8% Friday
• Nasdaq 100 futures rose 0.2%. The Nasdaq 100 climbed 1.1%
• Nikkei 225 futures rose 0.9%
• Australia’s S&P/ASX 200 Index futures added 0.5%
• Hang Seng Index futures gained 0.8% earlier

Currencies

• The Japanese yen was little changed at 109.83 per dollar
• The offshore yuan was at 6.5042 per dollar
• The Bloomberg Dollar Spot Index was little changed
• The euro was at $1.1697

Bonds

• The yield on 10-year Treasuries rose one basis point to 1.26% Friday
• Australia’s 10-year bond yield was steady at 1.08%

Commodities

• West Texas Intermediate was at $62.34 a barrel, up 0.3%
• Gold dipped 0.2% to $1,777.83

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