(Bloomberg) — Asian stocks looked set for a muted start to the week after a better-than-expected increase in U.S. payrolls fueled expectations that the Federal Reserve is moving closer to a pullback of stimulus. The dollar held gains against major peers.
Futures pointed higher in Australia, and dipped earlier in Hong Kong. Japanese markets are closed for a holiday. U.S. futures were little changed in early Asia trading. On Friday, the S&P 500 climbed to a record, led by financials and materials, while the technology-heavy Nasdaq 100 fell. U.S. job growth accelerated in July by the most in almost a year and the unemployment rate declined, illustrating momentum in a labor market grappling with hiring challenges.
The U.S. 10-year Treasury yield climbed to about 1.3% Friday. Cash Treasuries won’t trade in Asia because of the holiday in Tokyo. Crude oil extended a decline after capping its worst week since October on concern the delta virus strain will hamper demand growth.
The jobs report fanned expectations the central bank will start to cut back stimulus as it wrestles with above-target inflation even as delta spreads. Dallas Fed President Robert Kaplan added to the speculation Friday, saying he’d support adjusting purchases soon but in a gradual manner.
U.S. inflation data this week will be a key marker for investors trying to gauge how acute price pressures are, ahead of the Jackson Hole symposium later this month.
“You have these concerns that if the economy is growing very, very strongly then that might bring forward the tightening or the tapering by the Fed,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said on Bloomberg Television. “There is a good chance they might announce that tapering in September and it would start later this year.”
Chinese assets will be closely watched after export growth slowed in July, adding to concerns the economy’s recovery will face fresh pressure in the second half of the year. China’s inflation data this week could also provide a reason to slow the bullish momentum in its sovereign bonds’ world-beating rally.
Traders are also keeping an eye on the progress of the vote on the $550 billion U.S. infrastructure package.
On the virus front, Anthony Fauci, the U.S.’s top infectious-disease doctor, said he’s “strongly in favor” of speeding booster shots to people with weakened immune systems, a further sign of how the delta variant continues to shift the strategies for curbing the pandemic.
Elsewhere, gold fell below $1,800 after the jobs report. Bitcoin traded back above $44,000 after hitting the highest since May over the weekend.
Here are some key events to watch out for this week:
Atlanta Fed President Raphael Bostic; Richmond Fed President Tom Barkin; Cleveland Fed President Loretta Mester; Kansas City Fed President Esther George among Fed speakers through the weekChina PPI, CPI due MondayThe U.S. consumer price index on Wednesday is forecast to show prices increased again in JulyOPEC Monthly Oil Market Report due Thursday
For more market analysis read our MLIV blog.
These are the main moves in markets:
S&P 500 futures were little changed as of 8:31 a.m. in Sydney. The S&P 500 rose 0.2%Nasdaq 100 futures dipped 0.2%. The Nasdaq 100 fell 0.4%Australia’s S&P/ASX 200 Index futures rose 0.4%Hang Seng Index futures fell 0.3% earlier
The Japanese yen was at 110.27 per dollarThe offshore yuan traded at 6.4801 per dollarThe Bloomberg Dollar Spot Index was steadyThe euro was at $1.1762
The yield on 10-year Treasuries advanced seven basis points to 1.30% Friday
West Texas Intermediate crude fell 1.3% to $67.41 a barrelGold was at $1,761.95 an ounce
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