(Bloomberg) — Asian stocks and U.S. equity futures rose Monday on bets that the global economic recovery will weather the omicron virus variant as well as tighter central bank policies to fight elevated inflation.
MSCI Inc.’s Asia-Pacific gauge climbed for the fourth session in five, while S&P 500, Nasdaq 100 and European futures advanced. U.S. shares closed at a record Friday following an inflation print that was high but in line with expectations.
The Federal Reserve on Wednesday is expected to speed up stimulus withdrawal, and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. U.S. Treasury yields edged up, with the rate on the 10-year security reaching about 1.5%.
Meanwhile, the pound slipped after Prime Minister Boris Johnson warned the U.K. faces a “tidal wave” of infections from the omicron variant. The dollar was steady. China again set its daily reference rate at a weaker-than-expected level, signaling that the central bank is willing to do more to stall a relentless rally in the nation’s currency.
About 20 central banks are due to hold meetings this week, including the Fed, the European Central Bank and the Bank of England. Those decisions have the potential to stir market swings.
“Global equities had a solid run last week and we’ll see if the goodwill lasts into what is a behemoth when it comes to event risk,” Chris Weston, head of research with Pepperstone Financial Pty Ltd., wrote in a note. Omicron and the Fed should dictate sentiment, he added.
Traders are also monitoring China’s outlook. Economists predict the nation will start adding fiscal stimulus in early 2022 after the country’s top officials said their key goals for the coming year include counteracting growth pressures and stabilizing the economy.
Geopolitics remain in focus. Foreign ministers from the Group of Seven nations on Sunday warned Russia to de-escalate its activities around Ukraine or face “massive consequences.”
In cryptocurrencies, Bitcoin and Ether fell. Binance, the world’s biggest crypto exchange, withdrew its application for a license to run a digital-token exchange in Singapore.
Elsewhere, crude oil extended gains in the wake of its biggest weekly advance in more than three months.
Bloomberg’s Markets Live team is running a survey on asset views for 2022. It’s anonymous, takes about 2 minutes, and the results will be shared in the latter part of December. To participate, click here.
Here are some key events this week:
- The U.S. Federal Open Market Committee starts its two-day policy meeting. Tuesday
- China releases November industrial output, retail sales data. Wednesday
- FOMC rate decision and Powell news conference. Wednesday
- Rate decisions from Indonesia, Philippines, Mexico, Bank of England, European Central Bank (Christine Lagarde briefing), Norway, Switzerland, Taiwan, Turkey. Thursday
- Markit manufacturing PMI: Eurozone, France, Germany, U.K., Australia. Thursday
- Rate decisions from Colombia, Japan, Russia. Friday
For more market analysis, read our MLIV blog.
Stocks
- S&P 500 futures rose 0.4% as of 10:55 a.m. in Tokyo. The S&P 500 rose 1% Friday
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 1.1%
- Japan’s Topix index rose 0.5%
- Australia’s S&P/ASX 200 Index advanced 0.5%
- South Korea’s Kospi index gained 0.8%
- Hong Kong’s Hang Seng Index rose 1.5%
- China’s Shanghai Composite Index rose 1.1%
Currencies
- The Japanese yen traded at 113.54 per dollar
- The offshore yuan was at 6.3655 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro traded at $1.1307
Bonds
- The yield on 10-year Treasuries rose about two basis points to 1.50%
- Australia’s 10-year bond yield was at 1.64%
Commodities
- West Texas Intermediate crude rose 1.4% to $72.68 a barrel
- Gold was at $1,786.09 an ounce
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