(Bloomberg) — The Australian dollar and US equity futures rose in early Asian trading Monday amid signs of improving ties between the US and China, while contracts for benchmarks in Asia showed muted moves.
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The Australian dollar edged higher against the greenback, adding to its 2% rise last week — the currency’s third consecutive weekly gain against the dollar. The advance has attracted hedge funds to short the currency.
The small advance Monday follows positive signs Sino-US relations will thaw, and also ongoing optimism China will unleash fresh stimulus to boost its flagging recovery.
US Secretary of State Anthony Blinken had “candid” talks with his counterpart in Beijing in a meeting that ran longer than planned. President Joe Biden said Saturday he hoped to meet Chinese president Xi Jinping in the next several months.
Futures contracts for Australian and Hong Kong equities were slightly lower, mirroring the decline in US stocks Friday, while Japanese contracts made a small advance.
Investors are keenly monitoring for signs of further official support for the Chinese economy after the country cut a key lending rate last week. The country is set to cut one and five year loan prime rates in decisions expected Tuesday, according to economist forecasts.
Nomura Holdings Inc., Standard Chartered Plc and Morgan Stanley have said authorities may increase the quota for local government special-purpose bonds to finance infrastructure investments in a potential stimulus package to boost growth.
“Market expectation of policy stimulus is building,” said Kinger Lau, chief equity strategist, China, for Goldman Sachs. He sees further official support for the economy among a series of drivers that could spur Chinese equities higher. “A number of these supportive catalysts are falling into place, engendering an attractive tactical market setup for stock operators to take risk,” he said in a Monday note.
Australian bond yields fell around one basis point while those in New Zealand rose by the same amount after Treasury yields climbed Friday. An index of the dollar was little changed while the yen fell to the lowest level since November on an intraday basis.
US stock and bond markets will be closed for the Juneteenth holiday Monday. The S&P 500 declined 0.4% Friday to end a six-session streak of advances as investors look for more insight on Federal Reserve interest rate decisions.
Fed Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Federal Reserve Bank of St. Louis President James Bullard and his counterparts in New York and Chicago are all set to speak in the week ahead.
The Fed kept interest rates unchanged last week but warned of more tightening ahead. In the past, pausing rate hikes for three months after such a run of interest rate hikes has boosted stock prices.
“We might just have a chance of avoiding recession,” said Loreen Gilbert, chief executive officer for Wealthwise Financial said in an interview with Bloomberg Television. “The markets are already expecting another rate hike and our baseline is that might not even happen.”
Other key central bank developments in the week ahead include policy meetings in Turkey, the UK and Switzerland.
Key events this week:
US Juneteenth holiday, Monday
China loan prime rates, Tuesday
US housing starts, Tuesday
Federal Reserve Bank of St. Louis President James Bullard speaks, Tuesday
New York Fed President John Williams speaks, Tuesday
Federal Reserve Chair Jerome Powell delivers semi-annual congressional testimony before the House Financial Services Committee, Wednesday
Federal Reserve Bank of Chicago President Austan Goolsbee speaks, Wednesday
Eurozone consumer confidence, Thursday
Rate decisions in UK, Switzerland, Indonesia, Norway, Mexico, Philippines, Turkey, Thursday
US Conference Board leading index, initial jobless claims, current account, existing home sales, Thursday
Federal Reserve Chair Jerome Powell delivers semi-annual testimony to Congress before the Senate Banking Committee, Thursday
Cleveland Fed’s Loretta Mester speaks, Thursday
Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
Japan CPI, Friday
UK S&P Global / CIPS UK Manufacturing PMI, Friday
US S&P Global Manufacturing PMI, Friday
Federal Reserve Bank of St. Louis President James Bullard speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 8:20 a.m. Tokyo time. The S&P 500 fell 0.4% Friday
Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.7% Friday
Nikkei 225 futures rose 0.1%
Hang Seng futures fell 0.7%
S&P/ASX 200 futures were little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0942
The Japanese yen was little changed at 141.93 per dollar
The offshore yuan was little changed at 7.1308 per dollar
The Australian dollar was little changed at $0.6878
Cryptocurrencies
Bitcoin fell 0.3% to $26,395.21
Ether fell 0.6% to $1,720.01
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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Source: https://finance.yahoo.com/news/aussie-dollar-us-futures-rise-222904488.html