Asian stocks advance as Chinese markets surge

SYDNEY (Reuters) – Asian stocks retreated to recent highs on Monday as Chinese markets rallied, as investors waited to see if the recent sell-off in longer-term U.S. Treasuries continues and possibly could. be reducing pressure on the besieged dollar.

MSCI’s largest Asia-Pacific stock index outside of Japan .MIAPJ0000PUS gained 0.5% to 565.74, approaching January’s high of 574.52.

Chinese blue chips .CSI300 led the way with gains of 2.4%, with the country’s central bank extending more medium-term loans to the financial system.

Beijing also granted a patent for CanSino Biologics Inc. (6185.HK) Ad5-nCOV COVID-19 vaccine candidate.

Japan’s Nikkei .N225 fell 0.6% after hitting a six-month high on Friday, as the country suffered its largest economic contraction on record in the second quarter.

E-Mini futures for the S&P 500 ESc1 strengthened 0.28%, just below the record close of 3,386.15. EUROSTOXX 50 STXEc1 futures fell 0.1% and FTSE FFIc1 futures fell 0.04%. [.N]

The second-quarter U.S. earnings season ends with major retailers reporting this week, including Walmart Inc (WMT.N), Home Depot Inc (HD.N) and Kohls Corp (KSS.N).

Sino-U.S. Relations remain a sticking point with US President Donald Trump on Saturday, saying he could put pressure on more Chinese companies such as tech giant Alibaba (BABA.N) after deciding to ban TikTok.

U.S. crude oil shipments to China will rise sharply in the coming weeks as the world’s two major economies prepare to review their January deal after a protracted trade war.

News that the scheduled review of the US-China Phase 1 trade deal over the weekend had been postponed indefinitely has not generated much reaction.

WATCH DEF

The highlight of the economic calendar will be the release of the minutes of the latest Federal Reserve policy meeting.

“Market participants will seek insight into the details and exact timing of the completion of the Fed’s monetary policy review, as well as more clarity as to the potential timing and structure of any forecast changes,” noted NatWest analysts. The steps.

Speculation is raging the Fed will adapt an average inflation target, which would seek to push inflation above 2% for a period of time to compensate for years it has spent below.

That, combined with a massive supply of new debt, caused long-term bond yields to rise sharply last week with 30-year US30YT = RR yields up 21 basis points as the curve steepened.

The rebound in yields gave the dollar some breathing space after weeks of losses. Against a basket of currencies, the dollar was a fraction lower at 93.016 = USD, still uncomfortably close to the recent low of 92.521.

The euro EUR = flattened a bit late last week after encountering resistance around the two-year high of $ 1.1915. Still, it still ended the week with a 0.5% gain and was last firm at $ 1.1856.

“Strategically long EUR / USD investors should stick with the position,” said Elias Haddad, forex analyst at CBA. “Greater euro area fiscal solidarity, real two-year swap rate differentials, and relative trends in central bank balance sheets between the euro area and the US suggest that the underlying uptrend of the EUR / USD is intact. ”

The single currency also made a noticeable upside breakout on the yen EURJPY = to reach untracked ground since April 2019. Indeed, the yen fell against most of its peers last week, with the dollar holding on to 106.59 JPY = Monday.

In commodities markets, gold stabilized at $ 1,943 an ounce XAU =, after bond yields surged, it lost 4.5% last week in its worst performance since March. [GOL/]

Oil prices edged up on hopes of Chinese demand and after data showed inventories of crude oil, gasoline and distillates all declined during the week of August 7.[O/R]

Brent LCOc1 crude futures rose 33 cents to $ 45.13 a barrel, while US CLc1 crude gained 38 cents to $ 42.39.