SYDNEY : Asian shares started cautiously on Monday after their best weekly run in five months, as investors looked ahead to China’s rate decision and U.S. Federal Reserve Chair Jerome Powell’s testimonies for clues on the rate path ahead.
S&P 500 futures rose 0.1 per cent early in Asia while Nasdaq futures firmed 0.3 per cent. Cash U.S. Treasuries were untraded owing to the Juneteenth holiday, while futures were up a fraction with little liquidity.
In Asia, Japan’s Nikkei fell 0.5 per cent, having clinched a fresh three-decade top on Friday, buoyed by the Bank of Japan’s (BOJ) decision to leave its ultra-easy policy setting unchanged, which has sent the yen to a 7-month low against the U.S. dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1 per cent lower, after hitting a four-month high on Friday and finishing up 3 per cent for the week, the best since January.
In China, market hope for more forceful stimulus is growing after the cabinet met on Friday to discuss measures to spur economic growth. Also, the People’s Bank of China is widely expected to cut its benchmark loan prime interest rates on Tuesday, following a similar reduction in medium-term policy loans last week.
Morgan Stanley’s chief China economist Robin Xing expects an imminent stimulus package given second-quarter gross domestic product (GDP) growth is tracking at 0 per cent, lagging the government’s target of around 5 per cent for the year.
“This requires more policy easing to stabilise investment – the key drag to 2Q GDP growth – and prevent weakness from spreading to household sentiment and services,” said Xing.
Source: Reuter
