Asian stocks rise above growing expectations of lower interest rates

© Reuters.

From Gina Lee – Asia Pacific stocks rose Monday morning on rising expectations that interest rates will remain low due to inflationary pressures. Meanwhile, a US pipeline operator pushed oil and gas prices up.

Japan was up 0.80% and South Korea was up 1.37% at 10:49 a.m. ET (2:49 a.m. GMT).

In Australia the value increased by 1.02%. Data released earlier in the day said the number rose to a better than expected 26 in April but was up 1.3% in March, slightly below expectations. Meanwhile, a lockdown in Sydney to contain the recent COVID-19 outbreak has been extended to May 17.

Hong Kong gained 0.59%.

China was up 0.25% and up 0.11% ahead of Chinese inflation data due Tuesday.

Government bond yields rose as much as 1.60% ahead of a busy week of auctions.

Colonial Pipeline had to shut down following a ransomware attack on Friday and has no schedule to restart. Investors are now looking to the Organization of Petroleum Exporting Countries (OPEC) monthly oil market report released on Tuesday.

Investors are also waiting for US inflation data, including the data due later in the week. Investors also look to speeches from a number of Fed officials during the week for clues as to the central bank’s next move.

Charles Evans, President of the US Federal Reserve, who will speak on the economic outlook later that day, and Lael Brainard, Governor of the US Federal Reserve, on Tuesday.

“Right now the view is very strong that inflation is temporary … the Fed, which has been experimenting for the past decade, is trying to keep it hot, but at the end of the day the disinflationary forces are still in the EU very strong economy, ” Citigroup (NYSE 🙂 Mo Apabhai, head of Asia trading strategy for Global Markets, told Bloomberg.

Across the Atlantic, Bank of England Governor Andrew Bailey will speak on Wednesday.

In terms of data, Friday’s April US employment report was also disappointing. It rose by just 266,000 for the month, well below the 978,000 increase in’s forecasts. The unemployment rate in April was also above expectations of 6.1%.

The data suggest that the Fed will continue to maintain its cautious stance. US Treasury Secretary Janet Yellen said the report “underscores the long-term move back to recovery.” However, Yellen reiterated that she expects a return to full employment in 2022.

“It certainly shifts the Fed rejuvenation schedule, perhaps to December, from previous expectations at the Jackson Hole Symposium in late August … softer payroll is good for the reflation trade,” said Chris Weston, director of research at Pepperstone. in a note.

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