Asian shares climbed and U.S. equity futures pared a drop Monday as the global economic recovery and corporate earnings prospects bolstered sentiment despite rising Covid-19 infections.
Hong Kong and China outperformed and Japan turned higher. Nasdaq 100 contracts got a boost as Treasury yields slipped further below recent peaks. S&P 500 futures were steady after the gauge chalked a fourth week of gains.
Bitcoin tumbled the most since February over the weekend, after reaching a record last week as crypto exchange Coinbase Global Inc. went public. The yen advanced and euro underperformed amid U.S.-Russia tension. The dollar ticked higher.
Asian credit markets rallied, led by a rebound in China Huarong Asset Management Co. bonds. China’s financial regulator said the bad-debt manager had ample liquidity, in the first official comments since the company missed a deadline to report earnings.
Robust economic data from China and the U.S. have buoyed investor sentiment, pushing the MSCI All-Country World Index to another record despite concerns surrounding the spread of Covid-19 variants. New infections in the past week surpassed 5.2 million, the most since the pandemic began.
The risk of another destabilizing increase in borrowing costs has also subsided, as bond yields have pulled back from recent highs. This week traders will look for further confirmation of the private sector’s recovery from the pandemic as the earnings season gathers pace.
“Our current view is that with short-term interest rates set to remain low for the medium term and our expectation that earnings will continue to increase, it is unlikely that the increase in long-term interest rates will trigger an equity market fall,” Russel Chesler, head of investments and capital markets at VanEck Australia, said in a note.
The European Central Bank decision later in the week will also draw attention. The ECB is likely to keep policy unchanged, and to sound cautiously optimistic on the economy and stabilization in borrowing rates. It’s probably too soon for further details about the plans for the asset purchase program beyond the second quarter.
Meanwhile, traders are also monitoring growing tensions between the U.S. and Russia over jailed opposition leader Alexey Navalny.
Here are some key events to watch this week:
- Apple’s first product unveiling of the year on Tuesday.
- Reserve Bank of Australia releases minutes of its policy meeting on Tuesday.
- EIA crude oil inventory report on Wednesday.
- European Central Bank rate decision and President Christine Lagarde briefing on Thursday.
- U.S. releases manufacturing and services purchasing managers indexes Friday.
These are some of the main moves in financial markets:
- S&P 500 futures fell 0.2% as of 11:52 a.m. in Tokyo. The S&P 500 Index climbed 0.4%.
- Topix index rose 0.1%.
- Australia’s S&P/ASX 200 Index rose 0.2%.
- Hang Seng Index rose 1.1%.
- Shanghai Composite Index rose 1.3%
- Kospi index rose 0.4%.
Currencies
- The yen was at 108.63 per dollar, up 0.2%.
- The Dollar Spot Index rose 0.1%.
- The euro traded at $1.1953, down 0.3%.
- The offshore yuan was at 6.5284 per dollar.
Bonds
- The yield on 10-year Treasuries fell two basis points to 1.56%.
- The yield on Australia’s 10-year bond was steady at 1.73%.
Commodities
- West Texas Intermediate crude lost 0.2% to $63 a barrel.
- Gold was at $1,778.97 an ounce, climbing 0.1%.
