Asian shares rise ahead of US rate outlook and job report

Asian shares rise ahead of US rate outlook and job report

Asian shares rose on Monday as bond markets paused ahead of an update on the US rate outlook and a job report from the world’s toughest central bank that could decide whether the next super-sized hike is needed.

Disappointment ran through the markets when China set its growth outlook at a 5.3% target instead of the preferred 5.6%. However, with the newest real data being comparatively strong, investors were retained in a positive mood. In contrast, Chinese blue chips declined by 0.8% after soaring 1.6% from the previous week, but MSCI’s index of Asia-Pacific stocks outside Japan went up 0.2%.

Japan’s Nikkei rose 1.3% to a three-month high, while South Korean shares rose 0.6%, helped by softer inflation estimates. EURO STOXX 50 futures fell 0.2%, while the FTSE fell 0.1%. S&P 500 and Nasdaq futures were flat after gains on Friday as bond yields edged lower.

10-year Treasuries yielded 3.958% after last week’s rally to 4.09% proved too tempting to attract buyers.

Markets are bracing for a rate hike from the Federal Reserve, which is expected to remain in quarterly moves rather than a half-point increase.

On Saturday, Mary Daly, President of the San Francisco Fed, reiterated that rates ought to increase but put a high bar for switching to a 0.5-point rise.

However, much may depend on what the February payroll report reveals on Friday. Forecasts are mobilizing for a more modest increase of 200,000 after January’s jump of 517,000, but risks are to the upside.

The euro held steady at $1.0628, off a seven-week low of $1.0534, while the dollar index was fractionally firmer at 104.620.

A drop in bond yields on Friday helped gold recover somewhat, trading at $1,856 an ounce.

Oil prices have fallen, and investors may be disappointed that China has not set more ambitious growth targets.

European market’s new trading week

European markets edged to a positive open, while Asia-Pacific stocks were mixed as investors bought further shares on expanding China.

Wednesday will feature congressional testimony from Fed Chairman Jerome Powell, giving investors a better idea of what the central bank thinks about inflation and the trend toward higher rates.

European markets are heading for a positive start to the new trading week.

UK’s FTSE 100 index should open up 1 point to 7950, Germany’s DAX up 49 points to 15635.

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