Asian stock markets strengthened on Monday, with the Nikkei hitting a new high. Investors are gearing up for a week filled with significant central bank events and key data releases that will influence market expectations regarding potential interest rate adjustments.
Attention is focused on Federal Reserve Chair Jerome Powell's testimony before lawmakers on Wednesday and Thursday. Analysts predict Powell will adopt a wait-and-see approach on policy due to recent inflation surprises.
The February payrolls report on Friday could impact market sentiments, with forecasts suggesting a steady rise of 200,000 jobs after January's impressive 353,000 increase.
The European Central Bank is expected to keep rates at 4.0% on Thursday but might revise its inflation outlook, hinting at future cuts.
Analysts from NatWest Markets anticipate a dovish yet cautious tone, pointing to a potential rate cut in June. They suggest a total of 100 basis points in cuts for the year, with a preference for a 25bp initial cut in June.
The Bank of Canada is likely to maintain its current stance, with a possible rate cut in June or later.
Upcoming events include President Joe Biden's State of the Union address, Super Tuesday U.S. primaries, and China's National People's Congress meeting, which could reveal new stimulus measures.
In the Asia-Pacific region, MSCI's index edged up 0.2%, halting a five-week winning streak. Japan's Nikkei rose 0.8%, surpassing 40,000 for the first time.
S&P 500 and Nasdaq futures traded near flat, following record closing highs on Friday. BofA analyst Savita Subramanian projects the S&P 500 to reach 5,400, driven by robust earnings.
Currency markets saw the dollar under pressure from soft U.S. economic data, while the yen strengthened ahead of Tokyo's consumer price data. The dollar stood at 150.08 yen, and the euro stabilized at $1.0842.
Soft U.S. economic data influenced gold's rise to a two-month high, with the metal trading at $2,083 per ounce. Oil prices remained steady as OPEC+ members agreed to extend voluntary output cuts into the second quarter. Brent rose to $83.57 a barrel, while U.S. crude edged down to $79.92 per barrel.
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