MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent, having gained 4.9 per cent so far in July to hit a five-month high
Asian shares seemed to end the month on a strong note on Monday in a week full of major economic releases, central bank meetings and earnings updates from tech giants Amazon and Apple, though increasing Japanese bond yields were a risk.
The early momentum for shares was positive after Friday’s U.S. data showed a decline in wage costs and core inflation, which sparked hopes the US Fed was done tightening. The data surprises strengthen confidence that global core inflation will declines steeply and set the stage for a developed market central bank policy halt and emerging market easing even if growth stays strong, said Bruce Kasman, head of economic research at JPMorgan.
Figures due this week include the U.S. ISM surveys on manufacturing and services, the July payrolls report and European inflation. China factory data are due later on Monday.
Nearly 30 per cent of the S&P 500 report results this week and, so far, earnings have been good enough to see the index extend its rally to 10 per cent since the beginning of June.
S&P 500 futures rose 0.1 per cent on Monday, bringing its gains for July to around 3 per cent, with Nasdaq futures 0.2 per cent higher.
Apple Inc and Amazon.com both report on Thursday, while other well-known names with results due include Western Digital Corp, Caterpillar Inc, Starbucks Corp, and Advanced Micro Devices.
Asian markets have also been trending higher, with China’s benchmark index jumping 4.5 per cent last week on hopes for more stimulus.
Early on Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent, having gained 4.9 per cent so far in July to hit a five-month high.
Japan’s Nikkei increased 1.0 per cent to reclaim the 33,000 mark and move closer to its recent three-decade peak.
Investors are still pondering the implications of Friday’s shock decision by the Bank of Japan (BOJ) to raise bond yields, in a step away from its ultra-easy policies.
BofA Analysts predict the BOJ’s bond buying added $1.3 trillion to global liquidity during the last 18 months and provided a low floor for global rates, so any sustained increase in Japanese government bond yields could ripple though other bond markets.
Japanese 10-year yields jumped to 0.6 per cent on Monday, still short of the new cap of 1.0 per cent and restricting the boost to the yen. While the yen initially rallied on the BOJ move, it soon reversed course, and the dollar jumped from 138.05 yen to as high as 141.18 late on Friday.