MSCI’s largest Asia-Pacific stock index outside of Japan .MIAPJ0000PUS rose 0.5% to its highest level since March 2018, extending a 2.8% gain last week.
Chinese blue chips .CSI300 strengthened 0.7% to levels not seen since mid-2015. Surveys showed that Chinese manufacturing activity fell by a tic to 51.0 in July, but services jumped by a point to 55.2, a sign of hope for a pickup in consumer demand. consumers.
E-Mini futures for the S&P 500 ESc1 rose a further 0.5%, while EUROSTOXX 50 STXEc1 futures rose 1%.
Tokyo’s Nikkei .N225 rallied 1.9% thanks to Warren Buffett’s new Berkshire Hathaway (BRKa.N) had purchased more than 5% of the shares in each of the top five Japanese trading companies.
The Nikkei fell on Friday after Prime Minister Shinzo Abe’s resignation raised doubts over future fiscal and monetary stimulus policies.
These concerns have been somewhat assuaged by the fact that Chief Cabinet Secretary Yoshihide Suga and a close ally of Abe are joining the race to succeed his boss. A lean leadership race is likely around September 13-15.
Attention was now focused on a host of Federal Reserve officials expected to speak this week, along with Vice President Richard Clarida later Monday as they further explained the bank’s new policy framework.
Fed Chairman Jerome Powell boosted equity markets last week by pledging to keep inflation at 2% on average, which allowed prices to warm up to balance periods of under pressure.
The risk of higher inflation going forward, assuming the Fed can pull it off, was enough to drive up longer-term Treasuries yields and steeper the yield curve.
US30YT = RR 30-year bond yields jumped almost 16 basis points last week and were last at 1.52%, 139 basis points above the two-year yield. The spread was now approaching the June spread of 146 basis points, the largest since late 2017.
This change did little to benefit the US dollar given the prospect that short rates will stay extremely low for longer, and the currency fell overall.
Early Monday, the dollar index was at 92.341 = USD and just a mustache above the recent two-year low of 92.127. The euro stood at $ 1.1902 EUR =, after climbing 0.9% last week.
Marshall Gittler, head of investment research at BDSwiss Group, noted that speculators had already racked up record levels of long positions in the euro, which could help limit further gains.
“A really crowded trade that will require more news to grow higher,” he argued.
The dollar stabilized somewhat against the yen at 105.55 JPY =, after declining 1.1% on Friday before finding support in the 105.10 / 20 area.
In commodities markets, the weak dollar helped prop up gold at $ 1,969 an ounce XAU =. [GOL/]
Oil prices have stabilized after falling on Friday after Hurricane Laura passed through the heart of the US oil industry without causing significant damage. [O/R]
Brent LCOc1 crude futures rose 26 cents to $ 46.07 a barrel, while US CLc1 crude gained 13 cents to $ 43.10.
Edited by Shri Navaratnam
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