US equity futures declined following comments from Treasury Secretary Scott Bessent, who downplayed the recent market decline, calling it a healthy adjustment. Despite this, Asian shares showed positive momentum, fueled by data indicating increased consumption in China.
Asian Markets Respond to Optimism About China’s Economy
Asian markets experienced gains, with optimism surrounding China’s economic recovery. In particular, oil prices rose, driven by expectations that demand from China, the world’s largest importer, will continue to grow. Meanwhile, the US dollar remained steady, and European stock futures remained largely unchanged.
Mixed Performance in China’s Stock Market
Equity markets in Asia saw a mixed performance. Stocks in Australia, Japan, and South Korea advanced. A key index tracking Chinese stocks listed in Hong Kong surged by as much as 1.3%, although it later pared some of the gains. In contrast, China’s CSI 300 Index, which tracks major onshore stocks, fluctuated amid concerns over a deepening housing slump in the country.
Asian Defense Stocks Surge on German Spending Deal
Defense stocks in Asia saw a significant boost after their German counterparts rallied. This came after an agreement was reached between Germany’s conservative leader Friedrich Merz and the Green Party on a debt-funded spending package aimed at enhancing defense and infrastructure.
European Focus Shifts to Germany’s Spending Plan
In Europe, investors’ attention remains focused on Germany. Merz’s spending plan still requires approval from lawmakers, which is expected to take place on Tuesday. Additionally, market participants will likely turn their focus to upcoming US retail sales and manufacturing data due later Monday. These reports are expected to provide further insight into the health of the US economy and influence the Federal Reserve’s policy decisions.
US Treasury Yields Show Little Movement
US Treasury yields remained mostly stable during Asian trading hours. The benchmark 10-year yield decreased slightly by 1 basis point, settling at 4.30%.
Central Bank Meetings in Focus Amid Trade Concerns
Investors are also closely monitoring central bank meetings this week as President Donald Trump’s trade policies continue to raise concerns. The Bank of Japan is expected to maintain its current interest rate after a hike last month, while the Bank of England is anticipated to keep rates unchanged.
Federal Reserve’s Challenges Ahead
Federal Reserve Chairman Jerome Powell faces a delicate balancing act. He must reassure investors that the economy remains stable while signaling that the Fed is ready to provide support if needed. According to analysts at Barclays, the Fed is expected to make only one rate cut this year, with two more cuts forecasted in the following year.
Gold Prices Steady Amid Risk Sentiment
In commodity markets, gold prices held steady after experiencing a slight decline on Friday, marking the first drop in four days. The precious metal’s movement reflects the prevailing risk sentiment in the market.
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