(Bloomberg) -- Asian shares climbed Monday to build on gains made on Wall Street, while the euro advanced as investors weighed the prospect of Europe following the Federal Reserve with more outsized interest-rate hikes.
Japanese and Australian equities rose and US futures edged higher after the S&P 500 and Nasdaq 100 snapped three-week losing streaks on Friday. Profitless tech firms, meme shares and Bitcoin all rallied into the end of the week. Markets in China, Hong Kong and South Korea are closed for holidays Monday.
The euro led gains versus the greenback after Bundesbank President Joachim Nagel signaled support for further interest-rate hikes in Europe. The yen held Friday’s rebound after officials in Tokyo increased their jawboning of the currency over the weekend.
Investors are also awaiting the August US inflation data on Tuesday, with headline CPI expected to cool to an 8% a year pace while the core measure that excludes food and energy is seen accelerating. Traders almost fully expect another jumbo-sized Fed hike next week, following two 75-basis-point increases.
“A downside surprise in US CPI is likely more of a concern and that could see the dollar weakening further,” Charu Chanana, a strategist at Saxo Capital Markets, said on Bloomberg Television. “We’ve seen some glimpses of that, you know, towards the end of last week. That could potentially be a risk to watch particularly this week.”
Fed Bank of St. Louis President James Bullard said he was leaning “more strongly” toward a third straight boost of that magnitude. His Kansas City counterpart Esther George noted officials have a “clear-cut” case for continuing to remove monetary support.
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Markets also have to digest the implications of Ukraine’s counter-offensive, after its forces continued their rapid advance in the Kharkiv region, exploiting a retreat of Russian defenses.
The rebound in risk assets and the retreat in the dollar at the end of last week contrast with the hawkish remarks from Fed officials. That stance, and recession worries, has driven equities down to nearly oversold levels. The Levkovich Index, a sentiment gauge, fell to -16 last week, a hair away from the -17 level that defines panic. Bank of America Corp.’s bull-and-bear indicator slid to the “maximum bearish” level -- often seen as a contrarian buy signal.
Here are some key events to watch this week:
- US CPI, Tuesday
- UK CPI, Wednesday
- US PPI, Wednesday
- US business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- China home sales, retail sales, industrial production, fixed assets, surveyed jobless rate, Friday
- Euro area CPI, Friday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.1% as of 10:58 a.m. in Tokyo. The S&P 500 gained 1.5% on Friday
- Nasdaq 100 futures gained 0.2%. The Nasdaq 100 climbed 2.2% on Friday
- The Topix index increased 0.7%
- Australia’s S&P/ASX 200 Index jumped 1.1%
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.5% to $1.0088 against the dollar
- The Japanese yen was little changed at 142.57 versus the dollar
- The offshore yuan was at 6.9327 per dollar
- The yield on 10-year Treasuries was steady at 3.31%
- Australia’s 10-year bond yield fell 2 basis points to 3.54%
- West Texas Intermediate crude slipped 1.7% to $85.34 a barrel
- Gold was at $1,716.59