Asian Stocks Climb on US Gains and China Support

Asian markets experienced a positive start to the week, buoyed by gains on Wall Street and supportive actions from China. Investors were optimistic despite concerns about inflation driven by rising commodity prices.

US Market Overview:

Futures for the Nasdaq 100 rose 0.3%, while S&P 500 futures increased by 0.2%. A key highlight this week is Nvidia Corp.'s earnings report on Wednesday. Nvidia, which has significantly contributed to the S&P 500's gains in 2024, saw its shares rise by about 1.5% in premarket trading. Other chipmakers, including Micron Technology Inc., also saw gains.

European Market Highlights:

In Europe, stocks were lifted by record-high prices for copper and gold. The Stoxx Europe 600 Index approached a record high, driven by mining companies such as Glencore Plc and KGHM SA. Copper futures reached unprecedented levels, surpassing $11,000 on the London Metal Exchange. Gold prices also hit new highs amid concerns over geopolitical tensions following the death of Iranian President Ebrahim Raisi.

Commodity and Inflation Concerns:

Bloomberg's commodity index has risen more than 4% this month, sparking fears of increased inflation. Despite this, many investors are hopeful that inflationary pressures will ease, allowing major central banks like the Federal Reserve and the European Central Bank to cut interest rates later this year.

Gene Salerno, Chief Investment Officer at SG Kleinwort Hambros Bank Ltd., commented, "Investors aren't too worried about the economy. The rise in commodity prices is just one part of the inflation story, and we're seeing other inflation pressures, like those in the job market, start to cool."

Federal Reserve and Rate Cuts:

Expectations of the Fed shifting towards rate cuts have influenced recent market movements. The Dow Jones Industrial Average closed above 40,000 for the first time, and the S&P 500 hit several record highs. Michael Wilson of Morgan Stanley, previously bearish on the market, is now optimistic, predicting further gains.

Despite this optimism, some policymakers have urged caution regarding rate cuts. The ECB's Martins Kazaks and several Federal Reserve presidents have advised against premature cuts. Investors are awaiting further insights from Fed officials, particularly from Governor Christopher Waller, who will speak about the US economy and monetary policy this week.

Key Events This Week:

• Monday: BOE Deputy Governor Ben Broadbent speaks on monetary policy.

• Tuesday: Canada CPI, Fed Governor Christopher Waller's speech.

• Wednesday: UK CPI, FOMC minutes, New Zealand and Indonesia rate decisions, South Africa CPI.

• Thursday: Eurozone PMI, US new home sales, initial jobless claims, Chile rate decision.

• Friday: Japan CPI, Germany GDP, US durable goods, University of Michigan consumer sentiment.

Market Movements:

• Stocks: Stoxx Europe 600 up 0.2%, S&P 500 futures up 0.2%, Nasdaq 100 futures up 0.3%.

• Currencies: The Bloomberg Dollar Spot Index remained steady, euro at $1.0862, Japanese yen at 155.82 per dollar, offshore yuan at 7.2430 per dollar, British pound at $1.2696.

• Cryptocurrencies: Bitcoin rose 1.4% to $67,076.2, Ether up 0.7% to $3,095.1.

• Bonds: 10-year Treasury yield at 4.41%, Germany’s 10-year yield at 2.51%, Britain’s 10-year yield at 4.14%.

• Commodities: Brent crude at $83.64 a barrel, spot gold at $2,424.65 an ounce.

Asian stocks saw a rise on Monday, supported by gains in the US and positive measures from China. Key market events, particularly Nvidia's earnings report, are being closely monitored as investors navigate inflation concerns and potential interest rate cuts.

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