By Stella Qiu
SYDNEY (Reuters) – Asian stocks started cautiously on Monday after their best weekly run in five months, as investors eagerly awaited China’s rate decision and testimony from U.S. Federal Reserve Chairman Jerome Powell. for clues on the way forward.
S&P 500 and Nasdaq futures were mostly flat after Wall Street’s bull run met resistance on Friday. Cash U.S. Treasuries were not traded due to the June 16 holiday, while futures were largely flat. [.T]
In Asia, the Japanese Nikkei slipped 0.4%, after hitting a three-decade high on Friday, supported by the Bank of Japan (BOJ) leaving its ultra-easy policy unchanged, which sent the yen to a higher 7-month low against the United States. dollar.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.6%, after hitting a four-month high on Friday and ending up 3% for the week, the best since January.
China’s blue chips slid 0.5% while Hong Kong’s Hang Seng index fell 0.6%.
In China, hopes for stronger stimulus measures are growing after Friday’s cabinet meeting to discuss measures to boost economic growth, but concerns remain about whether they would be enough to revive a faltering economy.
The People’s Bank of China is expected to cut its prime interest rates on benchmark loans on Tuesday, following a similar reduction in medium-term loans last week.
Morgan Stanley expects a stimulus package imminent, including the easing of property purchase restrictions in prominent cities, more infrastructure support and targeted consumer subsidies.
“Given Q2 GDP growth stands at 0%, a strong sequential reacceleration in growth will be required for full-year GDP growth to reach the government’s target of “around 5 %,” China’s chief economist Robin Xing said.
Several major banks last week cut their growth forecasts for China after recent disappointing data.
US Secretary of State Antony Blinken will wrap up his rare visit to China on Monday, with investors waiting to see if he meets Chinese President Xi Jinping, which would likely be read as a positive sign in the otherwise frothy relationship between the two most major companies in the world. savings.
POWELL TAKES THE STAGE
After a week in which the stock market applauded the Fed’s decision not to raise rates in June, investors are also turning to a number of Fed speakers this week, with Powell set to deliver testimony at the Congress Wednesday and Thursday.
Some officials have already sounded hawkish, and with the dot chart showing two more rises, markets are pricing in a 70% chance the Fed will hike rates a quarter point in July before holding steady for the rest of the month. year.
“Fed Chairman Powell is testifying in the House and Senate emphasizing whether July’s FOMC (Federal Open Market Committee) meeting is truly ‘live,’ and whether the chart in Fed points of two more hikes is a true base case based on the data or more ‘ambitious,'” said Ray Attrill, head of currency strategy at National Australia Bank.
The Bank of England also meets on Thursday when it is expected to raise interest rates by a quarter point to a 15-year high of 4.75%. Markets are betting on a rate hike from the UK central bank to nearly 6% this year.
The dollar index was little changed against 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 hawkishness from 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. U.S. crude futures fell 1.0% to 71.03 a barrel, and Brent fell 1.3% to $75.63 a barrel. [O/R]
Gold prices fell 0.1% to $1,955.77 an ounce.
(Reporting by Stella Qiu; Editing by Christopher Cushing and Tom Hogue)