- Asian scholarships: https://tmsnrt.rs/2zpUAr4
- Falling US inflation eases fears of political tightening
- Markets approve US infra bipartite agreement
- Oil hits its highest level since October 2018
- Activity in the foreign exchange markets has been subdued
SYDNEY, June 28 (Reuters) – Asian stocks started the week cautiously on Monday as a spike in coronavirus cases in Asia over the weekend hurt investor morale as oil hovered around highs of 2 years and a half.
The largest MSCI index for Asia-Pacific stocks outside of Japan was slightly lower at 703.17, still near a two-week high of 705.35 reached on June 16. Australian stocks (.AXJO) slipped 0.3% while South Korea’s KOSPI index (.KS11) was slightly higher.
Japan’s Nikkei (.N225) was 0.1% weaker.
Investors were worried about a spike in coronavirus infections in Asia, Australia’s most populous city, Sydney, plunging into lockdown after a cluster of cases exploded involving the highly contagious Delta strain.
Indonesia is grappling with a record number of cases as a lockdown in Malaysia is expected to be extended. Thailand also announced new restrictions in Bangkok and other provinces.
Global equities hit record highs last week as lower-than-expected US inflation and the announcement of a bipartisan US infrastructure deal boosted risk appetite.
The infrastructure plan is valued at $ 1.2 trillion over eight years, including $ 579 billion in new spending.
“Investors are closely monitoring the progress of President Biden’s bipartisan infrastructure deal through Congress. The package could significantly boost demand, thanks to investments in renewable energy and electronic vehicle (EV) infrastructure, ”ANZ analysts wrote in a note.
Oil prices are at their highest level since October 2018 at the start of Asian trading as demand growth outstrips supply and OPEC + will be cautious in bringing more crude back to market from August.
Brent futures rose 7 cents to $ 76.25 a barrel, while US crude rose 6 cents to $ 74.11.
In Asia, all attention will be focused on the factory’s official activity from China scheduled for Wednesday. The manufacturing sector is expected to slow to 50.7 from 51. The Caixin private sector manufacturing PMI will follow later in the week.
On Friday, the S&P 500 (.SPX) rose 2.7% for the week, its strongest weekly gain since early February after data showed a measure of core inflation rose less than expected in May, easing fears of a sudden decrease in stimulus by the federal government. Reserve.
The Dow (.DJI) climbed 0.7% while the Nasdaq (.IXIC) fell 0.06% after hovering near the previous session’s high. MSCI’s stock gauge across the world closed at a record high of 721.91.
“The Fed should advance its communication on tapering during the third quarter. The core market expects tapering to start in January and amount to US $ 10 billion per month, ”ANZ economists said.
“However, if inflation remains high, the reduction may need to start earlier and occur at a faster pace. “
Opinions on the inflation outlook remain mixed, however, underscoring the market’s caution about potential volatility ahead of major economic data and corporate earnings reports.
Bank of America top strategist Michael Hartnett wrote in a note that U.S. inflation will remain high for two to four years and that only a market crash will prevent central banks from tightening over the next six months.
Later this week, a closely watched US employment report will be released for June, which could indicate strong demand for labor.
Yields on benchmark 10-year US Treasuries rebounded above 1.50% to end a week in which rates recorded their biggest increases since March.
Global monetary and fiscal stimulus in response to the COVID-19 pandemic are strengthening financial assets, despite an uneven pace of recovery across regions.
Boston Federal Reserve Chairman Eric Rosengren on Friday warned that a buildup of financial stability risks from a low interest rate environment could lead to a further slowdown that would halt the labor market recovery and would prevent a return to maximum employment.
The activity was reduced in foreign currencies. The US dollar remained stable against a basket of other currencies, in choppy trading.
The Japanese yen hovered around 110.80 against the greenback and the euro was also stable at $ 1.1936.
In commodities, spot gold rose 0.1% to $ 1,782.2 an ounce as weaker-than-expected US personal consumption allayed fears of higher inflation and weaker monetary conditions. strict, stimulating investor demand for the yellow metal.
Montage par Shri Navaratnam
Our Standards: Thomson Reuters Trust Principles.