SINGAPORE: Asian stock markets climbed cautiously on Monday amid hopes that the Federal Reserve might sound less aggressive about rate hikes this week, while wheat prices leapt after Russia withdrew from a pact allowing Ukrainian grain to transit the Black Sea.
Gains in Hong Kong (.HSI), Australia (.AXJO) and Korea (.KS11) pushed MSCI’s index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) up 0.8%. But China stocks fell following weak economic data, and the MSCI index is set for a tenth consecutive monthly loss. Japan’s Nikkei (.N225) rose 1.5%.
The performance follows a Friday rally on Wall Street but comes with bond and currency markets tempering some wagers on a change in tone from the Fed. The dollar, after posting two weeks of losses, steadied on Monday and rose 0.5% on the yen.
“Things had gotten too pessimistic,” said Jun Bei Liu a portfolio manager at Tribeca Investment Partners in Sydney, of the stocks rally. Recent drops in U.S. tech giants perhaps signal enough bad news is already in the price, she added.
“The valuation crunch for a lot of those companies is already done … we’re already getting earnings downgrade, and now the market is starting to look attractive in certain sectors.”
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Treasuries fell on Friday and slipped a little further in Asia trade, with benchmark 10-year yields up 3 basis points to 4.0392%. S&P 500 futures fell 0.2%.
Chicago wheat futures leapt more than 8% to two-week high of $8.93 a bushel in early trade, before settling back to $8.78, after Russia’s withdrawal from a deal to allow Ukrainian grain shipments to reach global buyers.
Under the United Nations-backed deal, Turkish, Russian and Ukrainian officials coordinated the movement of ships. No ships moved on Sunday, but the U.N. said it had agreed with Ukraine and Turkey on a movement plan for 16 vessels on Monday.
“Depending on the scramble to replace planned Ukraine cargoes, prices might even head into double digits for a period,” said Commonwealth Bank of Australia strategist Tobin Gorey. Corn futures rose 2%.
