U.S. futures climbed and stocks in Asia were little changed Monday, shrugging off the inflation concerns that weighed on markets last week. The dollar dipped.
Benchmarks rose in Australia and South Korea, where exports surged in April. Hong Kong slipped, while Japan and China are closed for holidays. S&P 500 and Nasdaq 100 contracts climbed. U.S. stocks dropped from a record Friday, amid data pointing to price pressures and talk of a possible pullback in central bank support. Still, the S&P 500 Index capped its biggest monthly rally since November.
Australia’s 10-year government bond yield advanced, after the Treasury benchmark held above 1.6%. Crude oil crept up toward $64 a barrel.
Inflation remains a key concern for investors. The latest U.S. data show fiscal stimulus helped drive the strongest monthly gains in personal incomes in records back to 1946, and the Federal Reserve’s preferred prices gauge rose by the most since 2018. Though last year’s pandemic shock has skewed some data, such readings fuel speculation that central banks may start pulling back support by trimming asset purchases.
“Interest rates going forward will be led more by expectations on the tapering from the Fed rather than by inflation,” Raffaele Bertoni, head of debt capital markets at Gulf Investment Corp., said on Bloomberg Television.
In his latest annual meeting, billionaire Warren Buffett warned of rising price pressures and a “buying frenzy” spurred by low interest rates. Dallas Fed President Robert Kaplan, who’s not currently a voter on the rate-setting committee, said signs of excessive risk-taking suggest it’s time to start debating a reduction in bond purchases. His remarks contrast with those of Fed Chairman Jerome Powell.
Top U.S. financial officials are downplaying inflation risks. Treasury Secretary Janet Yellen said on the weekend that the demand boost from President Biden’s economic plan would be spread over a decade.
Elsewhere, India’s virus crisis is worsening, with daily deaths hitting another record on Sunday. Prime Minister Narendra Modi has come under fire for his handling of the Covid-19 crisis and his party is trailing in a key state election.
Brian Jacobsen, multi-asset solutions senior investment strategist at Wells Fargo Asset Management, discusses his outlook for markets and where he thinks investors should be putting their money.
Source: Bloomberg
Here are some key events to watch this week:
- A slew of manufacturing PMIs are due Monday, including from U.S. and China
- Fed Chair Powell speaks in an event hosted by the National Community Reinvestment Coalition
- The Reserve Bank of Australia monetary policy decision is due Tuesday
- The Treasury announces its quarterly refunding on Wednesday
- Chicago Fed President Charles Evans gives a virtual speech on the U.S. economy at an event hosted by Bard College; Cleveland Fed‘s Loretta Mester speaks to the Boston Economic Club on Wednesday
- Bank of England rate decision Thursday
- U.S. April employment report is released on Friday
These are some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 9:28 a.m. in Hong Kong. The S&P 500 fell 0.7% Friday
- Australia’s S&P/ASX 200 Index rose 0.4%
- South Korea’s Kospi index gained 0.7%
- Hong Kong’s Hang Seng Index fell 0.2%
Currencies
- The yen was at 109.39 per dollar
- The offshore yuan was at 6.4708 per dollar
- The Bloomberg Dollar Spot Index slipped 0.1% after climbing 0.7% Friday
- The euro traded at $1.2032, up 0.1%
Bonds
- Treasury futures dipped after the 10-year yield held around 1.63% Friday. The cash market is closed in Asia Monday
- Australia’s 10-year bond rose two basis points to 1.77%
Commodities
- West Texas Intermediate crude rose 0.3% to $63.77 a barrel after sliding more than 2% Friday
- Gold was at $1,771.10 an ounce
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Stock Market Today: Dow, S&P Live Updates for May 3 - Bloomberg
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