(Bloomberg) — Asian stock markets are eyeing a strong open as China returns from a three-day holiday and Friday’s weaker-than-expected U.S. jobs report revives bets that the Federal Reserve will cut interest rates this year.
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U.S. stock futures rose slightly in early trading after the S&P 500 rose 1.3% in the previous session, while contracts in Australia and Hong Kong pointed to gains on Monday. The index of Chinese stocks listed on the Nasdaq rose 5.5% last week, pointing to a strong opening as mainland markets reopen. Japanese markets are closed for a holiday.
The positive sentiment comes after global stocks rose for a second week. U.S. Treasury bonds rallied on Friday after the payrolls release, and a slowdown in wages reassured investors worried about “stagflation” or a recession. Instead, the release provided sustenance to supporters of a slowing economy and would allow a data-dependent Fed to begin easing monetary policy later this year. Australian and New Zealand bonds also rose on Monday.
A litany of weaker-than-expected data points last week – from jobs to services to manufacturing – sent the U.S. version of Citigroup’s Economic Surprise Index to its lowest level since February 2023. The benchmark measures the difference between actual releases and analyst expectations. Nonfarm payrolls rose by 175,000 in April, the smallest increase in six months.
“The market has become more confident that the U.S. economy is actually not overheating,” said Chris Weston, head of research at Pepperstone Group Ltd. in Melbourne. “Conviction levels may still be low, but the platform is there for a surge in risky assets this week, particularly if ceasefire talks in Gaza really gain momentum.”
Oil prices rose in early trading after Israel closed the Kerem Shalom humanitarian border crossing into Gaza on Sunday following rocket fire from Hamas, which could derail weeks of delicate hostage-taking and ceasefire negotiations. Saudi Arabia has raised the price of crude oil sales to Asia as it seeks to tighten the oil market.
Traders will also be watching for a series of central bank meetings this week, led by a likely hawkish stance from the Reserve Bank of Australia on Tuesday after stronger-than-expected inflation data last month. Chinese economic data and inflation figures in important emerging markets are also due.
Some important events this week:
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China Caixin Services PMI, Monday
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Eurozone S&P Global Services PMI, PPI, Monday
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Tariff decision for Australia, Tuesday
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Eurozone retail sales, Tuesday
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UBS results, Walt Disney, BP results, Tuesday
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Minneapolis Fed President Neel Kashkari speaks Tuesday
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Interest rate decision for Brazil, Wednesday
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Sweden interest rate decision, Wednesday
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Toyota results, Wednesday
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China trade, Thursday
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Malaysia interest rate decision, Thursday
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Mexico CPI, interest rate decision, Thursday
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British BOE interest rate decision, Thursday
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Unemployment in Canada, Friday
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British industrial production, GDP, Friday
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Chicago Fed President Austan Goolsbee speaks Friday
Some of the key moves in the markets:
Shares
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S&P 500 futures rose 0.2% at 8:14 a.m. Tokyo time
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Hang Seng futures rose 0.6%
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S&P/ASX 200 futures rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index has barely changed
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The euro was little changed at $1.0762
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The Japanese yen was little changed at 153.20 per dollar
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The offshore yuan was little changed at 7.1953 per dollar
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The Australian dollar was little changed at $0.6614
Tie up
Cryptocurrencies
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Bitcoin rose 0.3% to $63,906.32
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Ether was little changed at $3,137.9
raw materials
This story was produced with support from Bloomberg Automation.
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