Reuters. File photo: Passes wearing protective face masks are reflected on a screen showing stock prices outside a brokerage in Tokyo.By Wayne Cole
SYDNEY (Reuters) – Asian stocks hit a 29-month high on Monday as global monetary and monetary policy investors rallied, it would be exciting, while a bullish reading on China’s service sector led to a steady recovery there.
MSCI’s broad index of Asia-Pacific shares outside of Japan () rose 0.5% to its highest level since March 2018, up 2.8% last week.
Chinese Blue Chips () fixed 0.7% to reach levels not seen since mid-2015. Surveys show that Chinese manufacturing activity fell to a1.0 in July, but services reached a full-fledged 55.55 in a sign of optimism to revive consumer demand.
E-mini futures for the S&P 500 () rose another 0.5%, while Eurost STX50 futures () added 1%.
Tokyo’s Nikkei () rallied 1.9%, supported by News Warren Buffett’s Berkshire Hathaway (N 🙂 has bought more than 5% stake in each of the five leading Japanese trading companies.
The Nikkei sank on Friday after the resignation of Prime Minister Shinzo Abe on Friday raised doubts about future fiscal and monetary stimulus policies.
Through the news, Chief Minister Cabinet Secretary Yoshihid Suga, and a close ally of Abe, will join the race to make his boss a success. A thin-down leadership competition is around September 13-15.
The focus was now on a group of Federal Reserve officials who are due to speak this week, as they kicked off with Vice Chair Richard Clarida on Monday as they became more involved in the bank’s new policy framework.
Fed Chair Jerome Powell last week boosted stock markets by promising to keep inflation at an average of 2%, allowing prices to remain more balanced when prices are cut.
The risk of higher inflation in the future, assuming the Fed could get it there, was enough to push long-term Treasury yields and sharpen the yield curve.
Yields on 0-year bonds () jumped nearly 1 point basis last week and were last at 1.52% at the end of the 1393 basis points above the two-year yield. The spread is now approaching 146 basis points in June, the largest since the end of 2017.
Short rates are likely to remain super-low in the long run. The dollar benefited little from that shift, and the currency depreciated sharply.
Earlier Monday, it closed at 92.341 () and is just a whisker from a recent two-year low of 92.127. The euro rose 0.9% to 1 1.1902 () last week.
Marshall Gittler, head of investment research at BDSVis Group, noted that speculators have set long-term position record levels in the euro that could serve to limit further gains.
“Really dense trade will take more news under that pressure,” he argued.
The dollar remained slightly stable at 105.55 against the yen
In commodity markets, the weakness of the dollar helped to underpin gold.
Hurricane Laura hit the U.S. on Friday. Oil prices remained stable after passing through without causing any widespread damage to the heart of the oil industry. [O/R]
Brent crude () futures rose 26 cents to .0 46.07 a barrel, while US crude () rose 13 cents. Closed at 43.10.
