Investors got a reprieve from the recent turmoil with stocks recovering from their worst weekly rout since 2011. The dollar fell on concern President Donald Trump’s budget proposal will drop a Republican Party goal to balance the budget in 10 years.
Shares in Hong Kong and China, which bore the brunt of last week’s selloff, rose as did South Korean equities after the S&P 500 Index jumped on Friday and the futures extended gains as the trading week got underway in Asia. Japan is closed for a holiday. Australian banks weighed on the benchmark there at the start of a sweeping inquiry into the nation’s financial system. Oil traded around $60 a barrel.
Even as U.S. stocks ended the week on a high note fears of interest-rate hikes that pushed markets into a correction persist. U.S. stocks ended their worst week in two years with the S&P 500 tumbling 5.2 percent. The Cboe Volatility Index ended almost three times higher than its level on Jan. 26. Ten-year Treasury yields finished the week at 2.85 percent, near where they started and after pushing as high as 2.88 percent.
“When we look at the Friday night action in the U.S., markets are still spinning around all over the place and so you might want to spend a bit of cash” on buying equities, said Sydney-based Stephen Miller, an adviser at Grant Samuel Funds Management. “But keep some powder dry.”
Traders are awaiting U.S. consumer-price data out on Wednesday with some trepidation. Pressure on equities has been emanating from the Treasury market, where yields spiked to a four-year high amid concern the Federal Reserve may accelerate its rate-hike schedule.
Monday’s rally in Asia took place amid attempts to thaw the tensions on the Korean Peninsula. Vice President Mike Pence told the Washington Post the U.S. is ready to engage in talks about North Korea’s nuclear program, signaling a shift in policy. The comments came after North Korean leader Kim Jong Un used his sister to invite South Korea’s president for talks in Pyongyang as the Winter Olympic Games got underway. The won outperformed Asian currencies.
Here are some important things to watch out for this week:
Trump will deliver his 2019 budget blueprint on Monday.
The U.S. consumer-price index, due Wednesday, probably increased at a moderate pace in January, economists project. Retail sales in the U.S., also out Wednesday, probably increased for a fifth straight month.
Japan is expected to extend the longest stretch of economic growth since the mid-1990s when it reports fourth-quarter gross domestic product on Wednesday.
Other key economic news out in Asia this week include: India CPI on Monday; Singapore and Malaysia GDP on Wednesday; Australia unemployment, Indonesia rate decision and India trade balance all on Thursday.
Australian central bank Governor Philip Lowe testifies to a parliamentary committee in Sydney on Friday.
Chinese New Year celebrations for the Year of the Dog begin in China and follow across much of Asia, including Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21.
Earnings season continues in full swing with reports from Bunge, TripAdvisor, SunPower, Con Edison, Bombardier, Heineken, Loews, Michelin, PepsiCo, MetLife,Cisco, Japan Post Bank, Credit Suisse, Nestle, Airbus, Allianz, Telstra, Coca-Cola, Deere, Eni, Credit Agricole and Campbell Soup.
South African President Jacob Zuma’s fate is set to be sealed on Monday when the top leadership of the ruling African National Congress meets to conclude the transition to a new administration.
These are the main moves in markets:
Euro Stoxx 50 futures rose 1.7 percent in early European trading. Futures on the S&P 500 advanced 0.6 percent as of 4:20 p.m. in Tokyo. The underlying gauge climbed 1.5 percent on Friday.
Hong Kong’s Hang Seng Index rose 0.6 percent. The Shanghai Composite Index added 0.8 percent.
The S&P/ASX 200 Index declined 0.3 percent.
South Korea’s Kospi index gained 0.9 percent.
The MSCI Asia Pacific Index excluding Japan gained 0.9 percent.
The Bloomberg Dollar Spot Index fell 0.3 percent.
The yen added 0.1 percent to 108.64 per dollar.
The won jumped 0.7 percent to 1,084 per dollar.
The euro added 0.3 percent to $1.2291.
The British pound was at $1.3849, up 0.2 percent, after sinking 0.6 percent Friday to the weakest in more than three weeks.
The yield on 10-year Treasuries climbed three basis points to 2.88 percent.
German 10-year bund yields rose three basis points to 0.77 percent.
West Texas Intermediate crude rose 1.4 percent to $60.04 a barrel. It slumped 9.6 percent last week.
Gold was up 0.5 percent at $1,323.57 an ounce.