stocks-set-to-climb-on-powell’s-dovish-fed-stance:-markets-wrap

Stocks Set to Climb on Powell’s Dovish Fed Stance: Markets Wrap

(Bloomberg) — Asian stocks look set to rise Monday after U.S. equities rallied to a record and Treasuries advanced on Jerome Powell’s signal of a cautious and gradual withdrawal of pandemic-era Federal Reserve policy support.

Futures for Japan, Australia and Hong Kong rose, while U.S. contracts were steady. The S&P 500 climbed following Chair Powell’s Jackson Hole speech, in which he said the Fed may start paring bond purchases this year but is in no hurry to raise interest rates and will be guided by data on Covid-19 risks.

Powell didn’t give a specific timeline for scaling back stimulus. Traders are awaiting U.S. jobs data this week to see if they flag a recovery strong enough for an earlier tapering. That could extend the first weekly steepening of the Treasury yield curve since July. A gauge of the dollar held a drop.

Commodity markets are focused on Hurricane Ida, which imperils U.S. oil, natural gas and fuel supplies. Crude and U.S. gasoline futures pushed higher.

Central banks are seeking to reduce monetary policy support in part to keep a lid on inflation, while at the same time nurturing economic recoveries facing challenges from the delta virus strain. Markets so far are reposing confidence in the ability of policy makers to pull off a delicate balancing act.

“There is little doubt Powell was dovish, relative to market pricing and positioning,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. Weston remains “positive on risk for now” but added a slowing global economy and Fed policy normalization remain threats to the outlook.

In Asia, Beijing’s regulatory broadside against private industry remains a key focus area. The latest step is a two-month campaign to crack down on commercial platforms and social media accounts that post finance-related information deemed economically harmful.

Elsewhere, gold held gains and Bitcoin was trading around $49,000.

Here are some key events to watch this week:

The U.S. plans to pull out almost all American troops from Afghanistan TuesdayOPEC meeting on output WednesdayEurozone manufacturing PMI WednesdayChina Caixin manufacturing PMI WednesdayU.S. jobs report Friday

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

S&P 500 futures added 0.1% as of 7:33 a.m. in Tokyo. The S&P 500 rose 0.9%Nasdaq 100 futures increased 0.1%. The Nasdaq 100 rose 1%Nikkei 225 futures rose 0.8%Australia’s S&P/ASX 200 futures gained 0.2%Hang Seng futures added 0.2%

Currencies

The Japanese yen was at 109.83 per dollarThe offshore yuan traded at 6.4628 per dollarThe Bloomberg Dollar Spot index was steadyThe euro was at $1.1797

Bonds

The yield on 10-year Treasuries declined four basis points to 1.31% Friday

Commodities

West Texas Intermediate crude rose 0.8% to $69.26 a barrelGold was at $1,817.85 an ounce

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