Global Stock Rally Provides Tailwind for Asia Open: Markets Wrap

(Bloomberg) — Stocks in Asia may get a boost Monday from improved risk appetite amid ongoing diplomatic efforts to curb the fighting in Ukraine and growing expectations for looser monetary policy in China.

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Equity futures rose for Australia and Hong Kong, and were steady for the U.S., after the best week for global equities in about 16 months. Japanese markets are closed for a holiday. There’s no cash Treasuries trading in Asia due to the break.

The dollar was mixed against major peers in early Asian trading, with the yen holding near a six-year low against the greenback. Australia’s currency was subdued after the nation banned alumina exports to Russia.

Russia is still pressing its invasion of Ukraine, which has stoked inflationary pressures by pushing up commodity prices, with oil holding above $100 a barrel. At the same time, Turkey said Moscow and Kyiv are moving closer in talks toward a cease-fire.

The bond market continues to flash caution about risks from the conflict and Federal Reserve tightening. The Treasury yield curve is flattening, and portions are inverted, which for some is an indicator of a looming economic slowdown.

A key question is whether the stock rebound and a moderation in volatility are durable. One prop is China’s vow to support its markets and economy. Investors are waiting to see if China’s de facto benchmark lending rate falls Monday. The majority of economists in a Bloomberg survey expect no change.

Another bulwark for equity market sentiment comes from cash-rich U.S. firms, according to Ed Yardeni, president of Yardeni Research.

“Now that the Fed is tightening, U.S. monetary policy is no longer bullish for stocks,” Yardeni wrote in a note. But “M&A, along with buybacks and dividends, should remain a significant source of support for stock market bulls,” he said.

Russian assets remain in the spotlight after the nation paid some dollar debts last week, easing some concerns about a default. Trading in sovereign ruble bonds is poised to restart this week, but Russia’s stock market is set to stay shut Monday.

Investors are awaiting a speech later Monday by Fed Chair Jerome Powell, less than a week after he and his colleagues kicked off a campaign of monetary tightening. A range of Fed speakers are due this week.

In the latest developments in the war, the Russian military delivered an ultimatum for the surrender of Mariupol, the besieged city in southern Ukraine.

Here are some key events this week:

Federal Reserve Chair Jerome Powell and Atlanta Fed President Raphael Bostic to speak, Monday
China loan prime rates, Monday
European Central Bank President Christine Lagarde among central bank speakers at the BIS innovation summit, Tuesday to March 23
EIA crude oil inventory report, Wednesday
Bank of England Governor Andrew Bailey, Fed Chair Powell speak at BIS panel, Wednesday
U.K. Chancellor Rishi Sunak’s “Spring Statement” on the budget, Wednesday
U.S. President Joe Biden attends NATO emergency summit in Brussels, Thursday
Eurozone Markit PMIs, Thursday
U.S. initial jobless claims, U.S. durable goods, Thursday

Some of the main moves in markets:

Stocks

S&P 500 futures were up 0.2% as of 7:13 a.m. in Tokyo. The S&P 500 rose 1.2% Friday
Nasdaq 100 futures were 0.1% higher. The Nasdaq 100 rose 2.1% Friday
Australia’s S&P/ASX 200 Index futures rose 0.8% earlier
Hang Seng Index futures climbed 3.2% earlier

Currencies

The Japanese yen was at 119.24 per dollar
The offshore yuan was at 6.3710 per dollar
The Bloomberg Dollar Spot Index was little changed Friday
The euro was at $1.1044

Bonds

Commodities

West Texas Intermediate crude was at $105.16 a barrel
Gold was at $1,919.18 an ounce