Stocks rose on Monday amid speculation that interest rates will remain low due to lower inflationary pressures, while oil and gas prices surged after a cyberattack on a U.S. pipeline operator on bewildered markets.
The largest MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.3%, while US equity futures rose 0.14%.
Australian stocks (.AXJO) hit their highest level in over a year, boosted by miners’ gains, but stocks in China (.CSI300) fell 0.74%. Japanese stocks (.N225) gained 0.53%.
Euro Stoxx 50 futures rose 0.42%, German DAX futures rose 0.32% and FTSE futures rose 0.37% indicating a good start to the European session.
Non-farm payroll data in the United States on Friday showed that job growth unexpectedly slowed in April, boosting equities but putting downward pressure on returns in the U.S. dollar and US treasury bills.
Oil and gasoline futures extended their gains after a cyberattack terminated a U.S. pipeline operator that supplies nearly half of the U.S. east coast’s fuel supply.
“It certainly pushes the Fed’s cutback schedule, perhaps until December compared to earlier expectations from the Jackson Hole Symposium in late August,” wrote Chris Weston, head of research at broker Pepperstone in Melbourne, in a note.
“A softer payroll is good for reflation trading; the dollar has weakened across the forex spectrum. We have also seen a solid supply on stock indexes and futures are rising.”
The Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) hit record closing highs on Friday after disappointing U.S. labor market data allayed fears of a surge in prices to the consumption. Read more
In recent weeks, some investors had bet that a solid US economic recovery after the coronavirus pandemic would force the Federal Reserve to raise interest rates sooner than the central bank had indicated.
However, the weakness of the non-farm payroll report caused a rapid reversal in some of these trades, which spilled over into stocks, bonds and major currencies.
The focus is now on US consumer price data, due Wednesday, which will help investors determine whether they need to lower their inflation expectations further.
The world’s largest stock market MSCI index (.MIWD00000PUS) has hit a record high on expectations that low rates will continue to boost lending and economic growth.
The dollar index against a basket of six major currencies edged up to 90.237, but was still close to its lowest since February 25.
The British pound jumped to its highest for more than two months against the greenback, but concerns over Scottish independence could dampen the gains of the pound, traders said. Read more
China’s spot yuan strengthened to 6.4265 to the dollar, the highest since January 29.
In the cryptocurrency market, ether hit a record high above $ 4,000. The biggest rival bitcoin rose to $ 58,920.
The benchmark 10-year Treasury yield stabilized at 1.5931% in Asia on Monday after plunging to a two-month low of 1.4690% on Friday.
US crude rose 0.51% to $ 65.23 a barrel. Brent crude rose 0.53% to $ 68.64 a barrel in Asian trading as the disruption in US supplies rocked energy markets.
Gasoline futures on the New York Mercantile Exchange rose 1.43% to $ 2.1574 per gallon, near a three-year high.
On Sunday, the White House is working closely with the main U.S. fuel pipeline operator Colonial Pipeline to help it recover from a ransomware attack that forced the company to shut down its main fuel lines. Read more
“The main advantage is that the bad guys are very adept at finding new ways to break into infrastructure,” Andrew Lipow, chairman of Lipow Oil Associates, told Reuters. “The infrastructure has not developed defenses that can compensate for all the different ways malware can infect its system.”
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