(Bloomberg) — Asian stocks followed gains on Wall Street after better-than-expected US payrolls data on Friday. Oil fell as Israel said it would remove some troops from Gaza.
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Japanese shares led the region higher, while those in Australia and South Korea also advanced. Chinese equities fell as sentiment was damped by a winding up petition for Shimao Group. Stocks in Hong Kong briefly erased losses following a report that the city is considering extra measures to boost the market.
While the US jobs report “once again shows that US economy remains resilient in the face of high interest rates, focus shifts to US CPI release this week which will be a bigger test of whether the recent inflation bump is a trend or not,” said Redmond Wong, a market strategist at Saxo Capital Markets.
Oil retreated more than 1% as traders monitored geopolitical tensions in the Middle East. Israel said on Sunday the country is removing some troops from southern Gaza, as Prime Minister Benjamin Netanyahu said victory was within reach. Still, Iran continued to prepare a response to a suspected Israeli attack on its consulate in Syria, while Hezbollah warned that it’s ready for war.
“The concession of moving troops out of Gaza is nowhere near cause to discount ongoing threats of more direct conflicts involving Iran,” said Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. “Oil’s upside volatility remains very much present, and that’s to a large part thanks to geopolitics amplifying supply shortfalls elsewhere.”
The People’s Bank of China kept the yuan’s reference rate within its recent range in its daily fixing Monday in a bid to stabilize the currency after its recent slide. The decision came as China’s financial markets reopened after a two-day holiday.
What China “discovered is that there was a heck of a lot more depreciation and selling pressure under the surface than they probably anticipated,” said Richard Franulovich head of foreign-exchange strategy at Westpac Banking Corp. “This is what happens periodically when you have a managed currency.”
US stock futures were little changed after the S&P 500 index and tech-heavy Nasdaq both climbed more than 1% on Friday after the jobs report.
Treasuries ticked lower as traders dialed back the prospect of Federal Reserve interest-rate cuts this year following the US jobs numbers. The unemployment rate edged lower to 3.8% in March, wages grew at a solid clip, and workforce participation rose, underscoring the strength of a labor market.
The focus will soon shift to US March inflation data due mid-week. Prices may stay above the Fed’s target band, as first quarter corporate earnings season gears up with results from banks including JPMorgan Chase & Co. and Citigroup Inc. due on Friday.
New Zealand’s central bank, the first to hike in the post-Covid tightening cycle, is expected to push back against easing bets when it delivers it next policy decision Wednesday. The European Central Bank is likely to keep its key rate unchanged as traders eye rate cuts within months.
Gold fell after closing at a record high last week, as investors weighed the strong US jobs report that saw traders unwinding bets for Fed rate cuts.
Key events this week:
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Philippines rate decision, Monday
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Israel rate decision, Monday
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Germany industrial production, Monday
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US Treasury Secretary Janet Yellen meets with PBOC Governor Pan Gongsheng, Monday
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Australia consumer confidence, Tuesday
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China aggregate financing, money supply, new yuan loans, Tuesday
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New Zealand rate decision, Wednesday
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South Korean parliamentary elections, Wednesday
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Brazil CPI, Wednesday
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US FOMC minutes, wholesale inventories, CPI, Wednesday
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Canada rate decision, Wednesday
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China PPI, CPI, Thursday
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Eurozone ECB rate decision, Thursday
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New York Fed President John Williams, Boston Fed President Susan Collins speak, Thursday
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Japan industrial production, Friday
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China trade, Friday
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South Korea jobless rate, rate decision, Friday
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Germany CPI, France CPI, Spain CPI, Friday
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Argentina CPI, Friday
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Citigroup, JPMorgan and Wells Fargo due to report results, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 12:15 p.m. Tokyo time
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Japan’s Topix rose 1.2%
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Australia’s S&P/ASX 200 rose 0.2%
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Hong Kong’s Hang Seng dropped 0.1%
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The Shanghai Composite rose 0.1%
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Euro Stoxx 50 futures rose 0.1%
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Nasdaq 100 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0839
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The Japanese yen was little changed at 151.75 per dollar
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The offshore yuan was little changed at 7.2467 per dollar
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The Australian dollar was little changed at $0.6581
Cryptocurrencies
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Bitcoin was little changed at $69,254.51
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Ether rose 0.3% to $3,413.2
Bonds
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The yield on 10-year Treasuries advanced one basis point to 4.42%
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Japan’s 10-year yield advanced one basis point to 0.780%
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Australia’s 10-year yield advanced eight basis points to 4.18%
Commodities
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West Texas Intermediate crude fell 1.4% to $85.66 a barrel
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Spot gold rose 0.9% to $2,349.94 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess and Yongchang Chin.
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