Tokyo, Japan (BBN) – Rumors about the demise of reflation trades look to have been at least a little exaggerated.
Asian stocks extended a global rally as investors looked ahead to data that will provide detail on the strength of US consumer prices and speeches from a range of Federal Reserve officials, reports Bloomberg.
The yen weakened Monday after the S&P 500 Index climbed to a record high on Friday.
Iron ore surged and copper climbed, buoying commodity producers across Asia.
Stock investors last week pushed the global index higher for a third week, while Trump’s promise of a “phenomenal” tax plan snapped a six-week losing streak for the Bloomberg Dollar Spot Index that represented its longest such slump since 2010.
The rebound in the latter half of last week saw some of this year’s angst recede after a crescendo of speculation that the so-called Trump reflation trade was withering.
Still, Federal Reserve Vice Chairman Stanley Fischer said over the weekend there remains “significant uncertainty” over the outlook for US fiscal policy.
Daniel Tarullo is stepping down as the Fed’s top bank regulator, amplifying the president’s ability to reshape oversight of Wall Street and monetary policy.
Fed Chair Janet Yellen faces Congress for two days of testimony this week and the dollar could rally if she suggests a March increase is still in the cards, Bloomberg strategists said.
Stocks in Tokyo gained after Shinzo Abe and US President Donald Trump refrained from arguing about currency levels during the Japanese prime minister’s two-day US visit.
Data on Monday showed Japan’s economy continued on a moderate growth path during the final quarter of 2016, driven by rising exports and business investment.
Japan’s economy has now expanded for a fourth consecutive quarter for the first time in more than three years.
India will report on January CPI, and expectations are that inflation slowed.
Traders will be keeping an eye on January inflation data from the US on Wednesday.
That comes between Yellen’s appearances before the House of Representatives and the Senate.
The MSCI Asia Pacific Index gained 0.3 per cent as of 12:49pm in Tokyo, trading at levels unseen since July 2015.
Japan’s Topix index advanced 0.6 per cent, near the highest in more than a year.
Australia’s S&P/ASX 200 Index added 0.7 per cent, led by commodities producers.
Rio Tinto Ltd. shares climbed toward a three-year high in Sydney trading.
Hong Kong’s Hang Seng increased 0.6 per cent and the Hang Seng China Enterprises Index jumped 1.2 per cent to the highest since November 2015.
The MSCI Emerging Markets Index rose 0.3 per cent after adding 1.2 per cent last week to the highest since July 2015.
Futures on the S&P 500 gained 0.2 percent.
The yen slid 0.6 per cent to 113.91 per dollar, after its biggest weekly decline since mid-December.
The euro dropped 0.2 per cent to $1.0620.
The Bloomberg Dollar Index rose 0.2 per cent, adding to last week’s 0.7 per cent advance when it climbed for the first week since before the Christmas holiday.
The yield on 10-year Treasury notes added one basis point to 2.42 per cent, paring some of last week’s drop.
Australian 10-year bonds declined, pushing yields up one basis point to 2.71 per cent.
Iron ore futures were up 5.6 per cent on the Dalian exchange.
The raw material used to make steel is trading at the highest in more than two years, after climbing 16 percent over the past five sessions.
Copper futures rose 1.1 per cent, extending Friday’s jump that was the largest since 2013 on the London Metal Exchange.
Crude futures were flat in New York, after rallying 3.2 percent over the previous three sessions.
The International Energy Agency said OPEC achieved a record 90 percent initial compliance with its output-cut deal while demand grew faster than expected.
Gold fell 0.3 per cent to $1,229.73 an ounce.