Asian Stocks Gain; Dollar Dips for a Third Day: Markets Wrap

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(Bloomberg) — Asian stocks started the week with gains after their U.S. peers closed higher Friday, as prospects for a pickup in growth outweighed concern over inflation pressures.

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Shares rose in Japan and Australia, and U.S. futures advanced. Mainland Chinese markets are closed through Thursday for the Golden Week holidays. The S&P 500 rose over 1% Friday after promising results for a Covid-19 pill and positive manufacturing data triggered a rally in companies that stand to benefit from an economic reopening.

The dollar declined for a third day, falling against most major peers. The yen ticked higher after a record number of flybys by Chinese warplanes close to Taiwan raised tensions in the region. Treasuries edged up, with 10-year yields slipping to 1.45%.

“The greenback’s rally has stretched the momentum indicators, and a correction/consolidative phase seems likely ahead of the U.S. employment report” on Friday, said Bannockburn Global Chief Market Strategist Marc Chandler.

Asia traders will be watching Monday for news on China Evergrande Group, which faces a maturing bond with little wiggle room for payment. Oil traders will monitor comments from OPEC+ which meets virtually amid a spiral higher in crude prices. A record number of flybys by Chinese warplanes close to Taiwan raised tensions in the region.

As investor fears mount about slowing economic growth, U.S. labor data at the end of the week will also be a key focus for markets. Last month global stocks posted their worst performance since March 2020 amid concern about elevated inflation, supply-chain bottlenecks, a global energy crunch and a slowdown in China.

Still, some market participants have been encouraged by historical patterns where stocks tend to show strength into year-end.

“Investors need to be mindful of seasonal market strength,” said Michael Purves, Tallbacken’s chief executive officer. “When the fourth quarter is ugly, it tends to be really ugly, but if it is strong, it tends to be quite strong.”

Elsewhere, Bitcoin traded around $48,000, largely maintaining its recent gains.

For more market analysis, read our MLIV blog.

Here are some events to watch this week:

  • OPEC+ meets virtually Monday to review output policy amid a global energy crunch.

  • Reserve Bank of Australia policy decision Tuesday

  • Rate decision in New Zealand on Wednesday

  • Reserve Bank of India monetary policy decision on Friday

  • The U.S. Labor Department releases unemployment and job creation data Friday

  • Annual Nobel announcements start on Monday, with the Peace Prize being awarded on Friday

Some of the main moves in markets:

Stocks

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.1% to $1.1608

  • The British pound advanced 0.2% to $1.3571

  • The Japanese yen gained less than 0.1% to 110.95 per dollar

Bonds

Commodities

  • West Texas Intermediate crude dropped 0.4% to $75.56 a barrel

  • Gold rose 0.2% to $1,765 an ounce

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