Asian stocks and U.S. futures rose Tuesday after Wall Street equities rebounded and China pledged measures to support economic growth. Treasuries steadied after tumbling. 

MSCI Inc.’s gauge of Asia Pacific shares gained for the first day in three as Japan climbed. Hong Kong advanced with Alibaba Group Holding Ltd. leading a rebound in Chinese tech firms after the company announced a management shakeup. The S&P 500 wiped out last week’s losses, while the technology-heavy Nasdaq 100 also gained as concerns about the severity of the omicron virus variant receded. European futures advanced.

Treasury yields rose sharply Monday, erasing most of Friday’s steep declines, amid corporate bond offerings, and the curve steepened. The edged up slightly Tuesday. The Australian dollar rose with bond yields after the central bank gave an upbeat assessment of the economy while stressing uncertainty from omicron. Oil extended gains.

China’s policy makers moved to expand support for the economy Monday as a property-market downturn threatens to hamper growth. They signaled an easing of real estate curbs and pledged to stabilize the economy in 2022. The People’s Bank of China said it will reduce most banks’ reserve requirement ratio, while Premier Li Keqiang said there’s room for a variety of monetary policy tools.  

Easing of monetary conditions to shore growth in the world’s second-largest economy should offer some succor for markets whipped by bouts of volatility. The faster pace of Fed tapering of its bond-buying, which will pave the way for raising rates next year to combat elevated inflation, has tested investors’ appetite for risk. Equity markets could be in for further turbulence on new restrictions to stem the spread of omicron.

There is a lot of uncertainty in the markets with the Fed, inflation and omicron spurring a a risk-off environment, Sylvia Jablonski, Defiance ETFs chief investment officer & co-founder, said on Bloomberg Televison. However, “the economic data looks very good. We don’t need the same sort of monetary stimulus that we had before so maybe the tapering isn’t so bad –- we don’t expect it to be too out of control or too quick so there is some good news for buying on the dip.”

On the data front, China’s exports grew faster than expected in November to hit a record on external demand and an easing power crunch.

The nation’s property debt crisis continues to be closely monitored as China Evergrande Group nears the end of a grace period for some coupons. Meanwhile, a group of Kaisa Group Holdings Ltd. bondholders sent the company a formal forbearance proposal, designed to buy the developer some time and avoid a default. 

Geopolitical tensions are also resurfacing. The U.S. and European allies are weighing banking sanctions if Russia invades Ukraine. U.S. government officials will boycott the Beijing Winter Olympics in February due to concerns about human rights abuses.

Here are some key events to watch this week:

• Euro area GDP Tuesday
• Reserve Bank of India rate decision Wednesday
• Olaf Scholz set to replace Angela Merkel as chancellor Wednesday
• European Central Bank President Christine Lagarde speaks at a conference Wednesday
• Federal Reserve Bank of Minneapolis President Neel Kashkari speaks Thursday
• Reserve Bank of Australia Governor Philip Lowe speaks Thursday
• China CPI, PPI, money supply, new yuan loans, aggregate financing Thursday
• U.S. CPI Friday

For more market analysis, read our MLIV blog.

Stocks

• S&P 500 futures rose 0.4% as of 2:23 p.m. in Tokyo. The S&P 500 rose 1.2%
• Nasdaq 100 futures added 0.4%. The Nasdaq 100 rose 0.9%
• Topix index rose 1.9%
• Australia’s S&P/ASX 200 Index gained 1%
• Kospi index rose 0.5%
• Hang Seng Index gained 1.9%
• Shanghai Composite Index was little changed
• Euro Stoxx 50 futures rose 0.4%

Currencies

• The Japanese yen was at 113.69 per dollar, down 0.2%
• The offshore yuan was at 6.3730 per dollar
• The Bloomberg Dollar Spot Index dipped
• The euro was at $1.1288

Bonds

• The yield on 10-year Treasuries rose about one basis point to 1.44%
• Australia’s 10-year yield rose six basis points to 1.64%

Commodities

• West Texas Intermediate crude rose 1% to $70.18 a barrel
• Gold was at $1,778.24 an ounce

Source By : https://www.bloomberg.com/news/articles/2021-12-06/asia-stocks-to-rise-after-china-action-u-s-gains-markets-wrap