Stocks rally slowed by China; commodities decline: Markets wrap

A gauge of Asian shares advanced along with US and European equity futures while Chinese stocks fell, weighed down by a modest economic growth target that diminishes the prospect of more stimulus from Beijing.

Gains in the region were led by Japan and South Korea, where benchmark indexes rose about 1%, following the lead from Wall Street on Friday. US stocks ended the week on a high note, driven by speculation that the Federal Reserve won’t raise interest rates beyond peak levels already priced in.

Shares fluctuated in Hong Kong and dropped about 0.2% in Shanghai as investors digested the implications of China’s goal of growth around just 5%. This set the tone for commodities from iron ore to copper, which slid together with oil on expectations that demand may be softer than some investors had expected.

Government bond yields declined in Australia and New Zealand, tracking moves in Treasuries on Friday, when the rate on 10-year US debt closed back below the closely watched 4% level. Treasuries were little changed Monday in Asia. A gauge of dollar strength fluctuated after a small rise earlier.

Investors will continue to watch moves in Chinese equities closely for indications on the resilience of the recent upward momentum seen in the nation and more broadly across Asia. A gauge of Asia’s equities rallied 1.5% last week after a near 6% slump in February.

A rally in the S&P 500 Friday helped snap a three-week losing streak while the Nasdaq 100 scored its best day since early February. Sentiment remained upbeat despite a report showing resilience in the service sector, as some investors wagered the impact of the Fed’s hikes on the economy would be delayed. A measure of prices paid by service providers showed costs rising at a slower pace, which was cheered by traders.

“Rates are going to be higher for longer so we don’t think the strength you’re seeing in the equity market is going to be sustainable in the back half of the year,” Nadia Lovell, UBS Global Wealth Management senior US equity strategist, said in an interview with Bloomberg Television. “We do think you’re going to see a drag on the economy that has implications for corporate earnings.”

This week brings a slew of key economic data and events for investors to consider. In Asia, eyes remain on the National People’s Congress in Beijing for any further policy announcements and details that may set the tone for how market friendly — or harsh — regulation will be through 2023. Australia’s interest rate decision will be in focus Tuesday and on Friday comes the last Bank of Japan policy decision under the current governor Haruhiko Kuroda.

Globally, traders will be watching the US non-farm payrolls report for clues on whether the economy can handle more rate hikes. Data last week showed continued labor-market resilience in the US, supporting the case for the Fed to stick to its tightening policy, a theme that had pushed almost every major asset into the red in February. Investors will also be glued to their screens when Fed Chair Jerome Powell speaks before Senate and House committees this week.

Key events this week:

• US factory orders, durable goods, Monday
• US wholesale inventories, consumer credit, Tuesday
• Fed Powell’s semiannual Monetary Policy Report to the Senate Banking Committee, Tuesday
• Australia rate decision, Tuesday
• Euro area GDP, Wednesday
• US MBA mortgage applications, ADP employment change, trade balance, JOLTS job openings, Wednesday
• Fed Chair Powell’s semiannual Monetary Policy Report to the House Financial Services Committee, Wednesday
• Canada rate decision, Wednesday
• EIA crude oil inventories, Wednesday
• China CPI, PPI, Thursday
• US Challenger job cuts, initial jobless claims, household change in net worth, Thursday
• Bank of Japan policy rate decision, Friday
• US nonfarm payrolls, unemployment rate, monthly budget statement, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 1:43 p.m. Tokyo time. The S&P 500 rose 1.6% on Friday
• Nasdaq 100 futures rose 0.3%. The Nasdaq 100 rose 2% on Friday
• Japan’s Topix index rose 0.8%
• Australia’s S&P/ASX 200 Index rose 0.6%
• Hong Kong’s Hang Seng was little changed
• The Shanghai Composite fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0645
• The Japanese yen rose 0.2% to 135.58 per dollar
• The offshore yuan fell 0.3% to 6.9179 per dollar
• The Australian dollar fell 0.2% to $0.6757

Cryptocurrencies

• Bitcoin fell 0.6% to $22 357.44
• Ether fell 0.7% to $1,561.23

Bonds

• The yield on 10-year Treasuries declined one basis point to 3.94%
• Japan’s 10-year yield was little changed at 0.50%
• Australia’s 10-year yield declined 13 basis points to 3.77%

Commodities

• West Texas Intermediate crude fell 1% to $78.92 a barrel
• Spot gold was little changed