Stocks up, futures steady on dovish Powell stance: markets wrap

Most Asian stocks rose Monday and Treasuries held an advance, bolstered by Jerome Powell’s signal that pandemic-era Federal Reserve policy support will be withdrawn cautiously and gradually.

Japan led gains and Chinese technology stocks advanced on bargain hunting in the beaten-down sector. US and European futures were steady after a record Wall Street close in the wake of Chair Powell’s Jackson Hole speech. Powell said the Fed may start paring bond purchases this year but is in no hurry to raise interest rates and will be guided by data on Covid-19 risks.

Powell didn’t give a specific timeline for scaling back stimulus. Traders are awaiting US jobs data this week to assess whether the economic recovery merits an earlier tapering. Strong figures could extend the first weekly steepening of the Treasury yield curve since July. The dollar held a drop.

The focus in China remains on Beijing’s regulatory broadside against private industries. A commentary in Chinese state-run media described President Xi Jinping’s crackdown as a “profound revolution” sweeping the country and warned that anyone who resisted would face punishment.

Central banks are seeking to reduce monetary policy support in part to keep a lid on inflation, while at the same time nurturing economic recoveries facing challenges from the delta virus strain. Global shares are at all-time highs, suggesting markets expect officials can achieve this delicate balancing act.

“There is little doubt Powell was dovish, relative to market pricing and positioning,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. Weston remains “positive on risk for now” but added a slowing global economy allied with Fed policy normalisation remains a threat.

Commodity markets are focused on Hurricane Ida. US gasoline futures jumped after the storm barreled ashore in Louisiana, disrupting energy supplies. Oil edged lower. Elsewhere, gold pared gains and Bitcoin dipped below $48 000.

Here are some key events to watch this week:

• The US plans to pull out almost all American troops from Afghanistan Tuesday
• OPEC+ meeting on output Wednesday
• Euro zone manufacturing PMI Wednesday
• China Caixin manufacturing PMI Wednesday
• US jobs report Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% of 7:06 a.m. in London. The S&P 500 rose 0.9%
• Nasdaq 100 futures added 0.1%. The Nasdaq 100 rose 1%
• Japan’s Topix index rose 1.1%
• Australia’s S&P/ASX 200 increased 0.3%
• South Korea’s Kospi climbed 0.3%
• Hong Kong’s Hang Seng gained 0.1%
• China’s Shanghai Composite shed 0.1%
• Euro Stoxx 50 futures climbed 0.1%

Currencies

• The Japanese yen was at 109.76 per dollar
• The offshore yuan traded at 6.4673 per dollar
• The Bloomberg Dollar Spot index was steady
• The euro was at $1.1801

Bonds

• The yield on 10-year Treasuries fell one basis point to 1.30%
• Australia’s 10-year yield fell two basis points to 1.17%

Commodities

• West Texas Intermediate crude fell 0.4% to $68.49 a barrel
• Gold was at $1 814.33 an ounce, down 0.2%