(Bloomberg) -- Stocks and US equity futures rose Monday amid scaled back expectations of aggressive Federal Reserve interest-rate hikes and as investors assessed Chinese pledges to shore up economic growth.
An Asian share gauge added about 0.5%, with South Korea, Hong Kong and China in the green. S&P 500, Nasdaq 100 and European contracts made modest gains following a Wall Street rally Friday. Japan is shut for a holiday.
China’s central bank Governor Yi Gang said the monetary authority will step up implementation of prudent monetary policy. Another report flagged possible help for the real-estate industry. The nation faces rising Covid cases, hobbling lockdowns and deepening property-sector woes.
The dollar slipped, with a gauge of the greenback’s strength down from a record high. Faster inflation bolstered New Zealand’s currency. Oil fell as the market digests slowing demand and whether supply will be increased after President Joe Biden’s visit to Saudi Arabia.
Treasuries won’t trade in Asia due to the Japan break. Treasury futures edged up. Inversions on parts of the yield curve are a sign the bond market views the Fed’s tightening cycle against inflation as still tough enough to risk recession.
Investors continue to be whipsawed by concerns over runaway inflation and the potential for a US recession. At the same time, equity valuations are becoming cheaper.
While stocks are pricing in a recession, there are signs that “this is a market that wants to start bottom fishing,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said on Bloomberg Television. “People are starting to look for things that have been de-risked,” she said, adding US small-caps are often cited as an example.
Data last week showing a drop in long-term US inflation expectations eased some fears that elevated price pressures are becoming entrenched. Strong retail sales underscored a resilient economy despite tightening monetary policy.
Still, the outlook remains troubling for many investors. The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update as nations run out of options to tackle worsening risks.
Key events to watch this week:
- Earnings this week include Bank of America, Goldman Sachs, Tesla
- US Treasury Secretary Janet Yellen visits South Korea. Tuesday
- Reserve Bank of Australia releases July minutes. Tuesday
- UK Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey speak at event. Tuesday
- Bloomberg Crypto Summit in New York. Tuesday
- Bank of Japan, European Central Bank rate decisions. Thursday
Some of the main moves in markets:
- S&P 500 futures rose 0.2% as of 10:32 a.m. in Tokyo. The S&P 500 rose 1.9% Friday
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 1.8%
- Australia’s S&P/ASX 200 Index rose 0.5%
- South Korea’s Kospi index added 1.2%
- Hong Kong’s Hang Seng Index rose 0.4%
- Shanghai Composite Index rose 0.3%
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was at $1.0106
- The Japanese yen rose 0.3% to 138.11 per dollar
- The offshore yuan was at 6.7560 per dollar
- The yield on 10-year Treasuries declined four basis points to 2.92% Friday
- Australia’s 10-year bond yield added two basis points to 3.43%
- West Texas Intermediate crude was at $96.89 a barrel, down 0.7%
- Gold was at $1,713.40 an ounce, up 0.3%
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