Author: Wayne Cole
SYDNEY (Reuters)-Asian stock markets experienced a moderate rebound on Monday, as Wall Street hit a record high and China’s policy easing helped calm some of the recent global economic growth anxiety, although there are still many potential pitfalls this week.
In the United States, before Fed Chairman Jerome Powell testifies on Wednesday and Thursday, inflation data may cause panic, and the market will be highly sensitive to any remarks about an early exit.
The earnings season also follows JPMorgan Chase, Goldman Sachs, Citigroup (New York Stock Exchange:) and FuGuo bank (New York Stock Exchange:) In those reports.
China has released data on economic growth, trade, retail sales and industrial output, worrying that given the sudden policy relaxation last week, these data may be unacceptable.
Westpac analysts said in a report: “In the past month, expectations for China’s prospects have deteriorated because some of the disappointing data have become worse due to economic growth falling off the peak after the pandemic recovery.
“However, the annual growth rate is still expected to be higher than 8.0%. By the second half of 2022, the quarterly growth pulse should firmly return to the trend.”
For now, investors are very happy that the bear market plunge in New York last week pushed Wall Street higher and eased the bond bull market.
On Monday, Morgan Stanley Capital International’s broadest index in the Asia-Pacific region outside of Japan rose 0.9% and fell 2.3% last week.
It rebounded 2.3%, away from the two-month low hit on Friday, while South Korea gained 0.9%. Chinese blue chip stocks rose 1.7%.
Nasdaq futures remained almost unchanged after their recovery on Friday.
The US 10-year Treasury bond yield stabilized at 1.362%. After the price rose for eight consecutive trading days, it was as low as 1.25% on Friday. [US/]
NatWest Markets analysts pointed out: “The rise in U.S. interest rates in July was very significant.” “No one can explain this move perfectly…but concerns about global growth and Covid Delta variables have raised new doubts about inflation.”
This risk-off sentiment also supported the safe-haven US dollar until the profit ended on Friday. After hitting a three-month high of 92.844 last week, the latest price of the basket of currencies is 92.147.
The safe-haven yen against the dollar also fell to $110.18, while the euro against the dollar strengthened from last week’s low of $1.1780 to $1.1871.
European Central Bank President Christine Lagarde surprised the market on Monday, saying that the bank will change its policy guidance at the next meeting and show that it is serious about restoring inflation.
The European Central Bank’s new strategy allows it to tolerate inflation rates above its 2% target when interest rates are nearing their lowest point.
The prevailing risk aversion last week helped gold rise, and the current trading price is US$1,805 per ounce, compared to the June low of US$1,749.
Due to tighter US inventories, oil prices stabilized on Monday after the turbulent week ended. After OPEC negotiations on restrictions broke down, traders are still uncertain about the supply outlook. [O/R]
In late trading, it fell 4 cents to US$75.51 per barrel, and was flat at US$74.56.