Asia is starting this back-to-school week with some rather encouraging results, following FED Chairman Jerome Powell’s speech on Friday.
Japan’s Nikkei rose 0.9%, and the broadest MSCI index of Asia-Pacific shares outside Japan gained 0.32% in early trading before Chinese markets opened.
U.S. stock futures, the S&P 500 e-minis, barely budged, up 0.04 percent.
Investors had been waiting for Powell’s speech to get a clear indication of his vision on the timing of the central bank’s asset purchase cuts or interest rate hikes to begin removing monetary stimulus.
However, in his prepared remarks, he offered no indication on the reduction of asset purchases beyond saying it could be “this year,” causing the S&P 500 and Nasdaq to close.
The next big event on traders’ calendars will be the U.S. nonfarm payrolls numbers for August due out Friday. Powell has indeed suggested that an improving labor market is one of the key prerequisites for action.
“A strong payroll print could trigger a debate for a September peak,” said Rodrigo Catril, senior currency strategist at NAB.
The lack of a timetable for cuts has sent U.S. Treasuries and the dollar lower, and both trends continued Monday morning in Asia.
The yield on benchmark 10-year Treasuries was 1.3054% compared to its U.S. close of 1.312%, and the dollar index, which measures the greenback against a basket of currencies, was off about a two-week low.
Investors in China are watching the data this week to see if it will indicate that policymakers are more likely to step up easing measures.
“With growth slowing and accommodative signals from the (People’s Bank of China) meeting this week, we expect more easing, but still at a measured pace.”
Oil was also in focus after energy companies suspended 1.74 million barrels per day of oil production in the U.S. Gulf of Mexico as Hurricane Ida slammed into the Louisiana coast as a Category 4 storm. Oil prices meanwhile rose after energy companies suspended production.
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