Metals, stocks surge as investors focus on rate cut expectations

SINGAPORE / WAM

Asian shares hit two-year highs while copper and gold struck records on Monday as investors wagered on interest rate cuts around the corner and China stepping up efforts to steady its property sector, Reuters reported. Brent crude futures rose to a one-week high of $84.25 a barrel after reports on fresh instability in the Middle East.
Gold climbed more than 1 percent to $2,449.89 and copper futures surged nearly 7 percent in Shanghai to a record 88,940 yuan a tonne and fetched $11,104.50 in London. ANZ analysts pointed to tight supply and signs of resilient global growth as helping copper and noted record first-quarter imports of 566 tonnes of gold into China as supporting prices. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4 percent, Japan’s Nikkei rose 0.7 percent and hit a five-week high and world shares were within a whisker of last week’s record peaks.
S&P 500 futures rose 0.1 percent, as did FTSE futures and European futures. China announced “historic” steps to stabilise its property sector, with the central bank facilitating 1 trillion yuan ($138 billion) in extra funding and local governments set to buy some apartments. It left benchmark rates on hold, as expected.
After last week cheering a slowdown in US inflation and European policymakers’ flagging rate cuts as soon as June, investor focus now turns to policy speeches, meeting minutes, a central bank decision in New Zealand and Nvidia results. “The week ahead will pivot on the Fed speakers and (Fed) minutes in how they paint the picture of policy risks ahead, with a bias to ease rather than hike essential,” said Bob Savage, BNY Mellon’s head of markets strategy and insights. Two-year US Treasury yields ended last week four basis points (bps) lower at 4.825 percent and were steady in Asia trade. Ten-year US yields were down 8.4 bps last week to 4.42 percent.
Big in Japan Across the Pacific speculation is growing that Japanese rates can lift off zero, which is driving government bond yields there to their highest in more than a decade. Ten-year yields went up 2.5 bps to 0.975 percent, the highest since 2013, though the wide gap to US yields left the unloved yen little changed. In currency markets the dollar logged its largest weekly drop on the euro in two-and-a-half months last week, but was steady in Asia morning trade on Monday. The euro was a touch stronger at $1.0880 on Monday. The yen was steady at 155.70 per dollar.
The Australian dollar rose 1.4 percent last week and held at $0.6697 on Monday and the New Zealand dollar hovered at $0.6127. The Reserve Bank of New Zealand sets interest rates on Wednesday and is expected to leave its main cash rate at 5.5 percent. Meeting minutes are due from Australia’s central bank and the Federal Reserve. Flash global PMIs are also out this week.
Elsewhere in commodities, unrest in New Caledonia drove up prices for its major export, nickel, and silver was chasing gold higher broke above $30.