Chinese Shares Rise in Catchup to Global Rally: Markets Wrap

(Bloomberg) — Chinese shares led gains in Asian equities as mainland markets played catchup after a holiday break. Most other Asian benchmarks also rose following softer-than-expected US payroll data Friday that revived bets on Federal Reserve interest-rate cuts.

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The CSI 300 Index jumped as much as 1.8% after being closed from last Wednesday through Friday, while stocks in Hong Kong took a breather following a nine-day winning streak. Stocks also rose in Australia, Taiwan and Singapore.

The MSCI Asia Pacific Index advanced for a third day, while US stock futures edge higher. The gains came after US shares rallied Friday as the jobs data backed the view that the economy is slowing enough to allow the Fed to start easing policy as early as September.

The yen weakened against all its Group-of-10 peers, weighed down by Japan’s wide interest-rate spread with the US. Japanese financial markets are shut for a holiday, meaning there’s trading of cash Treasuries until the London open.

“We think the rally can sustain for a bit” in China, as valuations are still low and positioning from hedge funds and long-only funds remain near five year lows, Sunil Koul, Asia-Pacific equity strategist at Goldman Sachs Group Inc., said in an interview on Bloomberg Television. “There is still a very strong interest from people in the recent weeks to increase allocations to China.”

While the US data boosted optimism over potential Fed policy easing, European policy makers appear likely to lower borrowing costs before their US counterparts.

European Central Bank Chief Economist Philip Lane said recent data have made him more certain that inflation is returning to the 2% goal, according to an interview with Spanish newspaper El Confidencial, raising the likelihood a first interest-rate cut in June. Central bankers including France’s Francois Villeroy De Galhau, Bundesbank President Joachim Nagel and Swiss National Bank President Thomas Jordan are due to speak at a Bank for International Settlements conference later Monday.

China’s President Xi Jinping arrived in France to begin talks aimed at stabilizing the nation’s relationship with Europe, as he tries to perform damage limitation on trade ties with the key bloc.

Traders will be mindful of a swath of central bank meetings this week, led by a likely hawkish Reserve Bank of Australia on Tuesday following stronger-than-expected inflation data last month. Chinese activity data as well as inflation readings in key emerging markets are also due.

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“While we view the bar to another RBA rate hike as very high, we acknowledge the window for rate cuts in 2024 has narrowed,” Tony Sycamore, strategist at IG Australia, wrote in a note. “We expect the RBA to keep rates on hold this month at 4.35% and to retain its neutral guidance with similar wording from the last board meeting.”

On the commodities front, oil rose after Israel closed the Kerem Shalom humanitarian crossing into Gaza on Sunday following a rocket barrage fired by Hamas, in an incident that may derail weeks-long delicate hostage and cease-fire negotiations.

Saudi Arabia lifted the price it sells crude to Asia as it attempts to tighten the oil market.

Some key events this week:

• Eurozone S&P Global Services PMI, PPI, Monday

• Australia rate decision, Tuesday

• Eurozone retail sales, Tuesday

• UBS earnings, Walt Disney, BP earnings, Tuesday

• Minneapolis Fed President Neel Kashkari speaks, Tuesday

• Brazil rate decision, Wednesday

• Sweden rate decision, Wednesday

• Toyota earnings, Wednesday

• China trade, Thursday

• Malaysia rate decision, Thursday

• Mexico CPI, rate decision, Thursday

• UK BOE rate decision, Thursday

• Canada unemployment, Friday

• UK industrial production, GDP, Friday

• Chicago Fed President Austan Goolsbee speaks, Friday

Stocks

• S&P 500 futures were little changed as of 1:48 p.m. Tokyo time

• Nasdaq 100 futures were little changed

• Australia’s S&P/ASX 200 rose 0.7%

• Hong Kong’s Hang Seng was little changed

• The Shanghai Composite rose 1%

• Euro Stoxx 50 futures rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro was little changed at $1.0764

• The Japanese yen fell 0.5% to 153.87 per dollar

• The offshore yuan fell 0.3% to 7.2160 per dollar

Cryptocurrencies

• Bitcoin rose 0.6% to $64,116.71

• Ether rose 0.1% to $3,141.11

Bonds

Commodities

• West Texas Intermediate crude rose 0.3% to $78.36 a barrel

• Spot gold rose 0.3% to $2,308.98 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sangmi Cha and Abhishek Vishnoi.

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