Market sentiment improves in Asia as China drops the last flag of the zero-Covid policy and the softer US wage growth data challenged hawkish Fed wagers. Even so, an absence of traders from Tokyo and a light calendar, as well as a cautious mood ahead of this week’s key inflation data, restrict the volatility during early Monday.
While portraying the mood, MSCI’s index of the Asia-Pacific shares outside Japan rises 2.25% to print the highest levels since late September. On the same line could be the shares from South Korea, Taiwan and India as each one of them rises over 1.0% intraday by the press time.
Chinese blue-chip stocks cheer the latest shopping spree in the dragon nation, as per the early activity signals for December and early January, whereas Australia’s ASX 200 and New Zealand’s NZX 50 trace equities in Beijing due to their trade ties with the Asian major.
It should be noted that mildly bid ASX 200 ignores downbeat prints of Aussie Building Permits for November.
China’s reopening of the international borders after a three-year blockage bolstered optimism in Asia. Also favoring the risk appetite could be comments from the People’s Bank of China (PBOC) Official who hinted at robust growth expectations from the dragon nation.
Additionally, Friday’s downbeat prints of US Average Hourly Earnings, ISM Services PMI and Factory Orders pushed back the hawkish hopes from the US Federal Reserve (Fed) as the figures raised US recession concerns. The same joined mixed comments from the Fed policymakers and hopes of an upbeat US earnings season to also favor risk-on mood in Asia.
On a broader front, S&P 500 Futures print mild gains while India’s benchmark equity index BSE Sensex rises over 1.0% by the press time. Also portraying the risk-on mood could be the upbeat oil prices, as well as the softer prints of the US Dollar Index (DXY).
Looking forward, a light calendar may allow the equity bulls to keep the reins but this week’s inflation data from the US, China and Japan are crucial for near-term direction.
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EUR/USD is keeping its range below 1.0700 in the European session, little affected by the Eurozone Sentix data. The pair is taking advantage of the extended weakness in the US Dollar amid hopes of a dovish Fed pivot and China's reopening optimism.
GBP/USD is building onto previous gains above 1.2150 amid a risk-on mood in European trading. Broad US Dollar weakness is underpinning the pair, as investors assess Fed rate hike expectations and BOE policymaker Mann's comments on inflation.
Gold price gains positive traction for the second successive day on Monday and climbs to an eight-month high, around the $1,880 area during the early European session.
Cardano and Solana recently witnessed massive breakouts in their prices. The next altcoin to follow ADA and SOL in this trend is Litecoin, bulls target a 22% rally in the payment token.
The focus will be on the start of the 4Q22 earnings season, which unofficially begins on Friday, with results from America's biggest banks and other industry bellwethers.
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