- Asian stock markets: https://tmsnrt.rs/2zpUAr4
- Oil climbs when supply is scarce and demand is strong
- Markets hope Beijing will contain Evergrande’s fallout
- The deadline for the US debt ceiling is approaching, the spending bill for the vote
- Bonds under pressure from restrictive central banks, inflation
SYDNEY, Sept. 27 (Reuters) – Asian stocks got off to a cautious start on Monday as oil prices rise to three-year highs fueling inflation fears and exacerbating recent tightening moves by some major central banks.
Oil surpassed its highs in July as global production disruptions forced energy companies to pull large amounts of crude oil from inventories while a natural gas shortage in Europe drove costs across the continent soaring.
Brent rose another 62 cents to $ 78.71 a barrel on Monday, while U.S. crude rose 71 cents to $ 74.69.
“We predict this rally will continue, with our year-end Brent forecast of $ 90 / barrel versus $ 80 / barrel previously,” Goldman Sachs analysts wrote in a customer note.
“The current global deficit in oil supply and demand is larger than we expected, with global demand recovering from the effects of the Delta even faster than our consensus forecast above.”
Such a surge could fuel speculation that global inflation will last longer than initially hoped and accelerate the end of super cheap money, favor reflation transactions in banking and energy stocks, while dragging down bond prices.
MSCI’s broadest index for Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) was unchanged after three consecutive weeks of losses.
Japan’s Nikkei (.N225) gained 0.4% on hopes of further fiscal stimulus once a new prime minister is elected.
Nasdaq futures rose 0.1% and S&P 500 futures rose 0.3%.
The fate of the China Evergrande Group (3333.HK) remained a great unknown after the real estate giant missed a payment on offshore bonds last week and another payment fell due this week.
Hong Kong stocks were the most under pressure, despite the Beijing government adding more liquidity to the financial system.
“We expect China’s policymakers to allow real estate deleveraging to reduce moral hazard, but we are confident that they will actively manage restructuring and effectively limit financial spill-overs,” JPMorgan analysts said in a press release .
U.S. fiscal policy will also be a focus of attention in the House of Representatives as a $ 1 trillion infrastructure bill will be voted on this week while a September 30 deadline for federal agency funding is the second partial government shutdown in three years could force. Continue reading
The week is jam-packed with Fed speeches led by Chairman Jerome Powell on Tuesday and Wednesday, with more than a dozen other events on the calendar.
The recent restrictive shift by the US Federal Reserve and some others around the world caused bond yields to fluctuate before rising significantly last week.
The 10-year Treasury is at its highest level since early July at 1.46% amid talks that reflation trading could resume as the world prepares for the end of super cheap money.
The rise in yields supported the US dollar, particularly against emerging market currencies that are competing with government bonds for global funds.
Against a basket of currencies, the dollar was firm at 93.292 and just below the 10-month high of 93.734 in August.
It even made some ground against the yen, hitting a significant chart barrier at 110.79. A break from this would take the currency to areas that have not been visited since the beginning of July.
The euro remained steady at $ 1.1719 as investors pondered the impact of a center-left Social Democrat-led German government following a narrow election victory on Sunday.
For the first time since 2005, the Social Democrats demanded a “clear mandate” to lead a government, thereby ending 16 years of conservative rule under Angela Merkel.
“The likelihood of a political shift to the left suggests that Germany’s fiscal course could have less of a burden on the economy in the next few years than is currently forecast,” said analysts from CBA in a press release. “Ultimately, the euro would benefit from this.”
The firmer dollar weighed on gold, which was at $ 1,748 an ounce and just above a six-week low of $ 1,738.
Reporting from Wayne Cole; Arrangement by Christopher Cushing
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