Asian Stocks Up Ahead of U.S. Inflation Data, Powell Testimony

This post was originally published on this site – Asia Pacific stocks were up Monday morning. Investors kept an eye on the inflation data and U.S. Federal Reserve Chairman Jerome Powell’s testimony later in the week for further clues on the economic recovery from COVID-19 and the timeline for asset tapering.

Japan’s Nikkei 225 was up 2.27% by 10:31 PM ET (2:31 AM GMT).

South Korea’s KOSPI rose 0.93%, as Seoul and neighboring regions entered level 4 COVID-19 curbs, the highest level possible, to combat the latest outbreak of the virus.

In Australia, the S&P/ASX 200 rose 0.90%. Australia reported its biggest daily rise in COVID-19 cases this year on Monday due to the spread of the virus’ Delta variant in Sydney. The country’s biggest city is entering its third week of lockdown.

Hong Kong’s Hang Seng Index was up 0.86%.

China’s Shanghai Composite was up 1.13% while the Shenzhen Component was up 1.17%. Investors await Chinese data, including exports, imports and the trade balance, due later in the week, as they continued digesting a surprise easing in monetary policy from the People’s Bank of China during the previous week.

“Expectations around China’s outlook have soured over the past month as a result of some disappointing partial data made a lot worse by the optics of coming off peak growth from the pandemic recovery… however, annual growth is still expected to be above 8.0% and, through the second half of 2022, the quarterly growth pulse should firm back to trend,” said Westpac analysts in a note.

The U.S. will release the core consumer price index (CPI) and the producer price index for June later this week. Investors will also be monitoring testimony by Powell on Wednesday and Thursday to give clues on the possibility of any talk of early tapering.

Benchmark 10-year U.S. Treasury yields were steady at 1.365%, falling to 1.25% on Friday following eight straight sessions of price gains.

“The rally in U.S. rates in July has been remarkable,” NatWest Markets analysts said in their own note. “No one driver perfectly explains the move…but fears about global growth and the COVID-19 Delta variant had raised new doubts on inflation.”

Across the Atlantic, European Central Bank (ECB) President Christine Lagarde said earlier in the day that the central bank will update its guidance on monetary stimulus in 10 days, and indicated that fresh policy might be introduced in 2022 to support the European economy after the current bond program ends.

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