SYDNEY, June 19 (Reuters) – Asian stocks started cautiously on Monday after their best weekly performance in five months as investors awaited China’s rate decision and testimony from the US Federal Reserve chairman. , Jerome Powell, looking for clues on the way forward.
Both S&P 500 and Nasdaq futures were mostly flat after Wall Street’s bullish streak met resistance on Friday. Cash US Treasuries were not traded due to the June 16 holiday, while futures were largely flat.
In Asia, Japan’s Nikkei (.N225) fell 0.4%, after hitting a three-decade high on Friday, led by the Bank of Japan (BOJ). departure its ultra-easy policy tightening unchanged, sending the yen to a 7-month low against the US dollar.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) it fell 0.6%, after hitting a four-month high on Friday and ending 3% for the week, the best since January.
China’s blue chips (.CSI300) fell 0.5% while Hong Kong’s Hang Seng Index (.HSI) decreased by 0.6%.
In China, hopes are rising for stronger stimulus after the the cabinet met on friday to discuss measures to stimulate economic growth, but concerns persist over whether they would be enough to revive a faltering economy.
The People’s Bank of China is widely expected to cut its benchmark lending prime rates on Tuesday, following a policy loan reduction in the medium term last week.
Morgan Stanley expects an imminent stimulus package, including easing restrictions on property purchases in major cities, more support for infrastructure, and targeted consumer subsidies.
“Given Q2 GDP growth is at 0%, a sharp reacceleration in sequential growth will be needed for full-year GDP growth to reach the government’s target of ‘around 5%,’ the chief economist said. from China, Robin Xing.
Several major banks last week cut their growth forecasts for China after the latest disappointing data.
United States Secretary of State Antony Blinken conclude his rare visit to China on Monday, with investors waiting to see if he would meet Chinese President Xi Jinping, which would likely be taken as a positive sign in otherwise frothy relations between the world’s two largest economies.
POWELL TAKES THE STAGE
After a week in which the stock market applauded the Fed’s decision to skip a June rate hike, investors are also expecting several Fed speakers this week, with Powell set to deliver testimony before Congress on Wednesday. and Thursday.
Some officials have already sounded hawkish, and with the dot chart indicating two more hikes, markets are pricing in a 70% chance that the Fed will hike rates by a quarter point in July before holding steady for the rest of the year. .
“Fed Chairman Powell provides House and Senate testimony with a focus on whether the July FOMC (Federal Open Market Committee) meeting is truly ‘live,’ and whether the dot chart of the Two more Fed hikes is either a true base case depending on the data or more ‘aspirational,'” said Ray Attrill, director of FX strategy at National Australia Bank.
The Bank of England will also meet on Thursday when it will raise interest rates by a quarter point to a 15-year high of 4.75%. Markets are betting that British central bank rates will rise to almost 6% this year.
The dollar index was little changed against its major peers at 102.34 early Monday, after falling 1.2% the previous week, the most in five months.
The yen was undermined by a dovish BOJ, hitting a seven-month low of 141.90 to the dollar, while the European Central Bank, which raised rates by a quarter point last week, helped the euro hold near a five-week high at $1,094. .
Oil prices fell more than 1% on Monday. US crude futures fell 1.0% to 71.03 a barrel, and Brent crude fell 1.3% to $75.63 a barrel.
Gold prices were down 0.1% at $1,955.77 an ounce.
Reporting by Stella Qiu; Edited by Christopher Cushing and Tom Hogue
Our standards: The Thomson Reuters Trust Principles.
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