(Bloomberg) — Asian stocks followed gains on Wall Street after better-than-expected US payrolls data on Friday. Oil fell as Israel said it would pull some troops out from Gaza.
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Benchmark equity indexes advanced in Japan, and edged higher in Korea and Australia. Hong Kong equity gauges declined. Futures for US stocks crept higher after both the S&P 500 and Nasdaq 100 indexes climbed more than 1% on Friday.
The People’s Bank of China kept the yuan’s reference rate within its recent range in its daily fixing in a bid to stabilize the currency after its slide toward weak end of trading band. The decision came as China’s financial markets reopened after a two-day holiday.
Treasuries ticked lower as traders dialed back the prospect of Federal Reserve interest-rate cuts this year following the US jobs numbers. The unemployment rate edged lower to 3.8% in March, wages grew at a solid clip, and workforce participation rose, underscoring the strength of a labor market.
“While the report once again shows that US economy remains resilient in the face of high interest rates, focus shifts to US CPI release this week which will be a bigger test of whether the recent inflation bump is a trend or not,” said Redmond Wong, market strategist at Saxo Capital Markets.
Oil retreated more than 1% as traders monitored geopolitical tensions in the Middle East. Israeli said on Sunday the country is removing some troops from southern Gaza, as Prime Minister Benjamin Netanyahu said victory was within reach. Still, Iran continued to prepare a response to a suspected Israeli attack on its consulate in Syria, while Hezbollah warned that it’s ready for war.
The PBOC kept its yuan fixing nearly flat at 7.0947 per dollar, compared with 7.0949 in the last session.
What China “discovered is that there was a heck of a lot more depreciation and selling pressure under the surface than they probably anticipated,” said Richard Franulovich head of foreign-exchange strategy at Westpac Banking Corp. “This is what happens periodically when you have a managed currency.”
The focus will soon shift to US March inflation data due mid-week. Prices may stay above the Fed’s target band, as first quarter corporate earnings season gears up with results from banks including JPMorgan Chase & Co. and Citigroup Inc. due on Friday.
Stock bulls are starting to hedge their exposures as Fed rate cuts are pared and questions over how far the rally may go. Cboe Volatility Index, known as the VIX, touched the highest since November last week as the benchmark S&P 500 Index suffered its first weekly loss in three weeks.
Elsewhere, New Zealand’s central bank, the first to hike in the post-Covid tightening cycle, is expected to push back against easing bets when it delivers it decision this week. Meanwhile, the European Central Bank is likely to keep its key rate unchanged as traders eye rate cuts within months. Minutes of the last meeting suggested a June easing is likely, while Governing Council member Yannis Stournaras last month said four cuts are possible this year.
In the corporate world, Shimao Group says China Construction Bank (Asia) filed a winding-up petition against the company in Hong Kong on April 5, according to an HKEX filing.
Elsewhere, gold declined after surging to record prices last week.
Key events this week:
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Philippines rate decision, Monday
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Israel rate decision, Monday
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Germany industrial production, Monday
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US Treasury Secretary Janet Yellen meets with PBOC Governor Pan Gongsheng, Monday
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Australia consumer confidence, Tuesday
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China aggregate financing, money supply, new yuan loans, Tuesday
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New Zealand rate decision, Wednesday
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South Korean parliamentary elections, Wednesday
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Brazil CPI, Wednesday
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US FOMC minutes, wholesale inventories, CPI, Wednesday
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Canada rate decision, Wednesday
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China PPI, CPI, Thursday
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Eurozone ECB rate decision, Thursday
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New York Fed President John Williams, Boston Fed President Susan Collins speak, Thursday
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Japan industrial production, Friday
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China trade, Friday
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South Korea jobless rate, rate decision, Friday
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Germany CPI, France CPI, Spain CPI, Friday
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Argentina CPI, Friday
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Citigroup, JPMorgan and Wells Fargo due to report results, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 10:19 a.m. Tokyo time
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Japan’s Topix rose 1.2%
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Australia’s S&P/ASX 200 rose 0.2%
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Hong Kong’s Hang Seng was little changed
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The Shanghai Composite fell 0.2%
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Euro Stoxx 50 futures rose 0.1%
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Nasdaq 100 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0829
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The Japanese yen was little changed at 151.75 per dollar
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The offshore yuan was little changed at 7.2480 per dollar
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The Australian dollar fell 0.2% to $0.6565
Cryptocurrencies
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Bitcoin rose 0.6% to $69,722.57
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Ether rose 1.1% to $3,437.95
Bonds
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The yield on 10-year Treasuries advanced two basis points to 4.42%
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Japan’s 10-year yield advanced one basis point to 0.780%
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Australia’s 10-year yield advanced eight basis points to 4.18%
Commodities
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West Texas Intermediate crude fell 2.3% to $84.92 a barrel
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Spot gold fell 0.9% to $2,309.17 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Yongchang Chin.
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