Asian Shares Open Mixed Ahead of Busy Data Week: Markets Wrap

(Bloomberg) — Asian equities traded mixed early Monday as investors looked ahead to a busy week of economic data including the Federal Reserve’s preferred inflation gauge.

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Shares in Australia and South Korea advanced while those for Japan edged lower. The moves follow a muted end to the week on Wall Street with the S&P 500 declining 0.1% and the Nasdaq rising by the same margin on Friday. US equity futures were little changed Monday.

Treasuries opened steady in Asian trading following a rally on Friday that wiped seven basis points from the 10-year yield. Australian and New Zealand bond yields ticked lower early Monday.

Traders will be monitoring China’s daily fixing of the onshore yuan Monday after the currency dropped the most in more than two months at the end of last week. Authorities had set a weaker-than-expected fixing, fueling speculation they would tolerate further losses. Chinese Premier Li Qiang downplayed investor concerns of challenges facing the economy, saying Beijing was stepping up policy support to spur growth and systemic risks are being addressed.

Elsewhere, the yen strengthened slightly Monday after Japan’s top currency official warned about excessive currency speculation and said authorities were prepared to take action if needed.

The dollar was steady following a recent run of gains. Other major currencies were little changed after an index of the greenback ended the week at the highest level in more than a month — and close to its 2024 high.

The recent advances for the dollar reflect a shift in investor thinking about the world’s reserve currency. At the start of the year, many expected the dollar to weaken against its peers as the Fed edged closer to rate cuts. Now, the prospect that other developed market central banks will also cut has rekindled the currency’s appeal.

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“Tightening usually causes recessions when it triggers financial crises that turn into credit crunches,” said Ed Yardeni, president of his eponymous research firm, said in a Monday note. “That sequence of events is unlikely now,” he said, citing the Fed’s use of emergency liquidity measures to address crises, such as the stress in the US banking system in March last year.

Investors will be monitoring a slew of inflation data around the world this week. That includes the Fed’s preferred measure of underlying inflation, due Friday, that’s expected to show price increases remained uncomfortably high in February. The core personal consumption expenditures index, which excludes food and energy costs, is seen rising 0.3% on the heels of its biggest monthly increase in a year.

Inflation readings are also due in Australia, France, Italy and Spain later this week, offering clarity on rising prices as investors begin to position for rate cuts.

Forecasts for Fed cuts have spurred renewed interest in the so-called bond steepener trade, where investors load up on short-dated US bonds that offer attractive short-term price appreciation as rates fall.

In other moves, West Texas Intermediate rose to trade above $80 a barrel and gold edged higher to around $2,168 per ounce. Bitcoin advanced to trade over $66,500.

Key events this week:

• US new home sales, Monday

• Bank of Japan issues minute of January policy meeting, Monday

• Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic speak, Monday

• Australia consumer confidence, Tuesday

• Spain GDP, Tuesday

• Hungary interest rate decision, Tuesday

• ECB chief economist Philip Lane appearance, Tuesday

• Australia CPI, Wednesday

• China industrial profits, Wednesday

• Eurozone economic, consumer confidence, Wednesday

• Russia industrial production, Wednesday

• South Africa interest rate decision, Wednesday

• Sweden interest rate decision, Wednesday

• Bank of Japan board member Noaki Tamura speaks, Wednesday

• Bank of England issues financial policy committee minutes, Wednesday

• ECB executive board members Frank Elderson, Piero Cipollone speak, Wednesday

• Fed Governor Christopher Waller speaks, Wednesday

• Australia retail sales, private credit, Thursday

• Brazil unemployment, Thursday

• Chile unemployment, industrial production, Thursday

• Czech Republic GDP, Thursday

• Germany unemployment, Thursday

• Sri Lanka trade, CPI, Thursday

• UK GDP revision, Thursday

• US consumer sentiment, jobless claims, GDP, Thursday

• French President Emmanuel Macron travels to Brazil, Thursday

• Exchanges closed in US and many other countries in observance of Good Friday holiday, Friday

• Vietnam CPI, industrial production, retail sales, trade, Friday

• France CPI, Friday

• Italy CPI, Friday

• Poland CPI, Friday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

• South Africa trade balance, Friday

• South Korea industrial production, Friday

• Thailand trade, Friday

• US personal income and spending, wholesale inventories, Friday

• Fed Chair Jerome Powell speaks in a livestreamed discussion

• San Francisco Fed President Mary Daly speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 9:12 a.m. Tokyo time

• Hang Seng futures were unchanged

• Japan’s Topix fell 0.7%

• Australia’s S&P/ASX 200 rose 0.9%

• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0809

• The Japanese yen was little changed at 151.31 per dollar

• The offshore yuan was little changed at 7.2765 per dollar

• The Australian dollar was little changed at $0.6517

Cryptocurrencies

• Bitcoin rose 1.2% to $66,947.01

• Ether rose 0.8% to $3,441.43

Bonds

• The yield on 10-year Treasuries was little changed at 4.19%

• Japan’s 10-year yield was unchanged at 0.740%

• Australia’s 10-year yield declined six basis points to 3.98%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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