(Bloomberg) -- Asian markets are set for a cautious start to the week as investors await signs of potential further stimulus from China and progress in US trade negotiations with the region.
The dollar was steady against major peers and US equity-index futures edged lower in early trading Monday. Contracts in Japan signal a gain when cash markets reopen after the yen weakened on Friday, while those in Australia and Hong Kong were little changed.
China’s finance minister Lan Fo’an at the weekend said the nation will adopt more proactive and effective policies to achieve its growth target and “bring stability and impetus to the global economy.” Authorities including the People’s Bank of China are set to hold a press briefing later Monday.
“The real question is around what will be announced - will it be additional stimulus measures or the front-loading of already announced stimulus,” said Tony Sycamore, a market analyst at IG in Sydney. “Until further details are unveiled later today, the market will treat this news cautiously after being burned a number of times over the past six months chasing China stimulus headlines.”
Traders will also be on watch for any signs of progress in US trade negotiations after President Donald Trump suggested another delay to his higher so-called “reciprocal” tariffs was unlikely. Asian nations are likely to strike interim deals to stave off the snapback of the most punitive US tariffs before the 90-day grace period expires in early July.
US stocks notched their longest advance in three months on Friday, while bonds and the dollar climbed amid increasing expectations the Federal Reserve could ease policy again in the first half of this year as the US economy softens. Worries about the economic fallout from tariffs drove US consumer sentiment to one of its lowest readings on record while long-term inflation expectations climbed to the highest since 1991.
Investors will also be focused on China manufacturing activity data, the Bank of Japan’s rate decision, the US jobs report, US gross domestic product and the Fed’s preferred gauge of inflation in the coming days.
“Data this week from both the US and China are expected to show the first signs of impacting the two largest economies in the world,” said Win Thin, global head of markets strategy at Brown Brothers Harriman. “With the 90-day pause in reciprocal tariffs set to end in early July, even that month seems too soon for a cut given the ongoing uncertainty regarding the tariff impact.”
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This story was produced with the assistance of Bloomberg Automation.