Asian stocks got off to a cautious start on Monday as investors eagerly awaited a key read on US inflation this week for advice on monetary policy, while Bitcoin took a kick after China cracked down mining and cryptocurrency trading.
The largest MSCI index for Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) barely changed due to slow trading. Japan’s Nikkei (.N225) added 0.1% and South Korea (.KS11) was flat.
Nasdaq futures were down 0.2% and S&P 500 futures were a bit firmer.
After surveys of global service sectors showed spectacular growth on Friday, all eyes will be on US personal consumption and inflation figures this week.
A high reading of the core inflation numbers would sound the alarm bells and could reignite discussions about a quick cut by the US Federal Reserve.
The newspaper has a host of Fed speakers this week, including influential Fed Governor Lael Brainard, and markets will be eager to know if they stick to the scenario of patience with politics.
BofA’s monthly survey of fund managers found a record high of 69% of respondents who expected economic growth and inflation to exceed trend globally.
As a result, managers had pushed into commodities and late cycles, where overweight positions were near 15-year highs, while the most crowded trade was Bitcoin.
“With such optimistic views on growth and inflation, the risk for investors is that growth will slow down and inflation will turn out to be temporary,” BofA analysts said in a note.
“In addition, technology, considered crowded fairly recently, is now back to an underweight stance and would likely benefit if inflation fears abated. “
Crowded Bitcoin trading has left it vulnerable to a selloff, with investors rushing to mass exits, seeing it drop 50% from its all-time high. The cryptocurrency lost 13% on Sunday alone and was the last 8% trade to $ 34,601.
It has been in part affected by China’s crackdown on mining and trading the world’s largest cryptocurrency as part of ongoing efforts to prevent speculative and financial risks. Read more
Major currencies were flat in comparison, with the euro standing at $ 1.2179 after repeatedly failing to clear chart resistance around $ 1.2244 last week.
The dollar was idling against the yen at 108.94, stuck between support at 108.56 and resistance around 109.33. Against a basket of currencies, the dollar had stabilized at 90.073 after hitting its lowest since January at 89.646 on Friday.
The weakness of the dollar combined with concerns about inflation and the insane volatility of cryptocurrencies to put gold back in favor. The metal was last at $ 1,881 an ounce, after hitting its highest since January.
“The recent mix of a strong US CPI, weak employment, and Fed policymakers willing to let inflation beat while targeting the employment deficit, may remain bullish for gold for some time to come.” Said Michael Hsueh, commodities and currency strategist at Deutsche Bank.
“Gold’s rally has been associated with a strong rally in parts of the commodities complex, increasingly represented by agriculture, metals and transportation indices this year, and a high of 8 10-year US inflation expectations.
Oil prices edged up on Monday after suffering a loss last week as investors braced for the resumption of supplies of Iranian crude.
Brent was the latest up 6 cents to $ 66.50 per barrel, while US crude added 11 cents to $ 63.69 per barrel.
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