With Australia wishing Her Majesty a happy birthday and Greater China out dragon boating, the rest of the region has contented itself with replicating Wall Street’s positive close on Friday. Especially with no fireworks emerging from the G-7 summit over the weekend. Given the ups and downs of the previous four years under President Trump, President Biden will take a tranquil G-7 meeting as a win. The leaders endorsed the 15% global corporate tax plan, made noises on climate change, donated some vaccines and pointed fingers at China and Russia.
Investors will be keeping a close eye on this week’s FOMC meeting. We’re unlikely to see any change in interest rates or the language in the rate statement. US inflation levels have risen, the Fed is too heavily invested in the transitory inflation narrative to change course. Thus, I very much doubt the members will even move their rate hike expectations forward in the dot-plot. Any mention or hint of a taper could cause sharp volatility in the financial markets, a scenario that the Fed is all too happy to avoid.
Friday saw the S&P 500 close 0.20% higher; the NASDAQ climb by 0.35%, and the Dow Jones edge 0.04% higher. Index futures on all three have drifted higher in Asia, with markets supported by the expectation that the FOMC this week will be as dovish as ever.
The Nikkei 225 has risen by 0.60% today, while the KOSPI is unchanged. With Greater China and Australia away, Singapore is flat, while Kuala Lumpur has increased 0.65% and Jakarta by 0.25%. Bangkok and Manila are 0.25% lower.
If Asia is in wait-and-see mode, the uneventful G-7 should be all Europe needs to open higher this afternoon. However, London may be held back as it awaits official confirmation of a one-month delay in full reopening, with travel and leisure stocks likely to feel the chill winds the most.