Asian shares soared to two-year highs on Monday, buoyed by investor optimism surrounding anticipated interest rate cuts and China’s efforts to stabilize its faltering property market.
Brent crude futures climbed to a one-week peak of $84.25 a barrel following a helicopter crash that claimed the life of Iran’s president and reports of health concerns regarding the Saudi Arabian king, triggering concerns of renewed instability in the Middle East.
Gold surged by more than 1% to $2,449.89, while copper futures skyrocketed nearly 7% in Shanghai to a record 88,940 yuan per tonne, and reached $11,104.50 in London.
ANZ analysts attributed the surge in copper prices to tight supply conditions and indications of robust global economic growth. They also noted record first-quarter gold imports of 566 tonnes into China as a supporting factor for gold prices.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed by 0.4%, with Japan’s Nikkei advancing by 0.7% to reach a five-week high. Global shares remained close to last week’s record peaks.
S&P 500 futures and European futures each rose by 0.1%, mirroring the positive sentiment in Asian markets.
China unveiled significant measures on Friday to stabilize its property market, including additional funding of 1 trillion yuan ($138 billion) facilitated by the central bank and plans for local governments to purchase some apartments. Benchmark rates were kept unchanged, as anticipated.
Following last week’s optimism spurred by a slowdown in U.S. inflation and hints of impending rate cuts by European policymakers, investor attention now turns to central bank speeches, meeting minutes, the Reserve Bank of New Zealand’s interest rate decision, and Nvidia’s financial results.
Bob Savage, BNY Mellon’s head of markets strategy and insights, emphasized the importance of forthcoming Federal Reserve communications in shaping market expectations, with a prevailing bias towards easing rather than hiking rates.
Two-year U.S. Treasury yields concluded last week marginally lower at 4.825%, remaining steady during Asian trade, while ten-year U.S. yields dipped by 8.4 basis points to 4.42%.
In Japan, speculation is mounting about the potential for interest rate adjustments, propelling government bond yields to their highest levels in over a decade. Ten-year yields rose to 0.975%, the highest since 2013, with the yen exhibiting minimal movement amidst the widening gap with U.S. yields.
In currency markets, the dollar remained stable in Asia morning trade after registering its largest weekly decline against the euro in two-and-a-half months. The euro edged slightly higher to $1.0880, while the yen held firm at 155.70 per dollar.
The Australian dollar, which posted a 1.4% gain last week, maintained its position at $0.6697 on Monday, while the New Zealand dollar hovered at $0.6127 ahead of the Reserve Bank of New Zealand’s rate decision on Wednesday.
Upcoming releases include meeting minutes from Australia’s central bank and the Federal Reserve, as well as flash global PMI data.
Elsewhere in commodities, unrest in New Caledonia drove up nickel prices, while silver followed gold’s upward trajectory, surpassing the $30 mark.
