GUARDED ACTIVITY:US Federal Reserve Chair Janet Yellen on Friday reaffirmed that US rates would likely start rising later this year, while Beijing backed stimulus.
Asian stocks rose, with the regional benchmark index on course for its biggest quarterly advance since the first three months of 2012, after China’s central bank indicated that more stimulus is on the way.
“Asia has gotten off to a positive start to the week, with China leading the region,” said Stan Shamu, Melbourne-based market strategist at IG Ltd. “Comments by PBOC [People’s Bank of China Governor Zhou Xiaochuan (周小川)] from the weekend have set the tone for Chinese equities with stimulus expectations ramping up.”
The Shanghai Composite surged by 2.6 percent, extending its advance in the past 12 months to 86 percent. A gauge of China manufacturing slid to an 11-month low this month, a private report showed last week.
Economists surveyed by Bloomberg News expect the PBOC to lower benchmark lending rates and banks’ required reserve ratios, adding to cuts made in recent months.
Activity was guarded elsewhere in a week bounded by holidays in the US and a US jobs report that could affect the timing of interest rate hikes there.
The Hang Seng China Enterprises Index also added 3.5 percent after China allowed mainland mutual funds to buy Hong Kong stocks.
After some early dithering, Japan’s Nikkei firmed by 0.8 percent, helped by talk of demand for the new quarter and financial year.
MSCI’s broadest index of Asia-Pacific shares outside Japan recouped early losses to gain 0.4 percent. European bourses were expected to open firmer, while S&P E-mini stock futures were quoted up 0.4 percent.
US Federal Reserve Chair Janet Yellen on Friday reaffirmed that US rates would likely start rising later this year, but emphasized that the pace of tightening would be gradual and data-dependent.
The conditional outlook helped nudge longer-dated US Treasury yields lower and left the US dollar listless for the moment. It fetched ￥119.21 yesterday, a whisker higher than at the end of last week and short of the near eight-year peak of ￥122.04 set early this month.
The euro eased back to US$1.0861, having in the last two weeks pulled up from a 12-year trough of US$1.0457.
Oil prices fell further, as Iran and six world powers tried to reach a nuclear deal that could add more supply to the market if sanctions against Tehran are lifted.
US crude eased US$0.77 to US$48.10 a barrel and Brent lost US$0.42 to US$55.99.
The data diary in Asia was rather sparse, with Japan reporting a disappointing decline in industrial output for February.
Figures on German inflation, European confidence and US personal income and spending are due later in the session.
Flash inflation data for the eurozone are expected today and manufacturing surveys on China tomorrow. That should be just an appetizer for Friday’s US payrolls report.
Economists polled by Reuters are forecasting a healthy rise of 244,000 in non-farm payrolls this month. If confirmed, it would be the 13th straight month of job gains of more than 200,000, a run not seen since from 1994 to 1995.
The market reaction is expected to be complicated by holidays across much of the western world on Friday. Only some US markets will be open and then only for shortened hours.
Investors will again have to keep a wary eye on Greece and its talks with international creditors where the parties are struggling to come up with a list of acceptable reforms.
Greece is expected run out of money by April 20 if it does not secure funding from its European partners, a source familiar with the matter told reporters last week.