MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.5 per cent, while Chinese blue chips advanced 1.1 per cent
Shares in Asia rose on Monday as risk sentiment improved, though a surge in oil prices to three-year highs could inflame inflation fears and aggravate the recent hawkish turn by some major central banks.
Oil surged past its July peaks as global output disruptions forced energy companies to pull large amounts of crude out of inventories, while a shortage of natural gas in Europe pushed costs up across the continent.
Brent advanced 98 cents on Monday to US$79.07 a barrel, while U.S. crude gained 97 cents to US$74.95.
We forecast that this rally will continue, with our year-end Brent forecast of US$90/bbl vs. US$80/bbl previously, wrote analysts at Goldman Sachs in a client note. The current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above consensus forecast.
MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.5 per cent after three consecutive weeks of losses. Japan’s Nikkei added 0.4 per cent on hopes for further fiscal stimulus once a new prime minister is chosen.
Nasdaq futures added 0.4 per cent, and S&P 500 futures gained 0.5 per cent.
Chinese blue chips advanced 1.1 per cent as the country’s central bank pumped more money into the financial system and investors hoped Beijing would limit the fallout from the troubled Evergrande Group.
We expect policymakers in China to allow deleveraging of property sector debt to take hold with an eye to reducing moral hazard, but are confident that they will actively manage the restructuring and effectively limit financial spillovers, said analysts at JPMorgan in a note.
Eyes will also be on U.S. fiscal policy with the House of Representatives due to vote on a US$1 trillion infrastructure bill this week, while a Sept. 30 deadline on funding federal agencies could force the second partial government shutdown in three years.
The week is packed with U.S. Federal Reserve speeches led by Chair Jerome Powell on Tuesday and Wednesday, with more than a dozen other events on the calendar.
Bond yields seesawed before ending last week sharply higher after latest hawkish shift by the U.S. central bank and several others globally.
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