Wall Street stocks, futures rise as more monetary easing nears

By Wayne Cole

SYDNEY (Reuters) – Global shares rose in Asia on Monday ahead of central bank meetings widely expected to yield two more interest rate cuts and key U.S. inflation figures that could give the green light for more easing there.

China's central bank cut its 14-day repo rate by 10 basis points, two days after markets were disappointed by the failure to cut long-term interest rates.

Analysts warned that the move would only follow an already implemented cut in seven-day repo rates, but stocks were happy with anything and added 0.3%.

A holiday in Japan dampened trading and MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3% after rising 2.7% last week. Singapore's main index rose to its highest since late 2007.

The Tokyo Stock Exchange ended slightly lower today, but futures were trading at 38,510 compared with a cash close of 37,723. The index rose 3.1% last week as the yen retreated from highs and the Bank of Japan signaled it was in no rush to tighten monetary policy.

EUROSTOXX 50 futures rose 0.5%, 0.3% and 0.4%.

The S&P 500 rose 0.3%, while Nasdaq futures rose 0.6%. The S&P 500 is up 1% so far in September, the weakest month on record for stocks, and is up 19% year-to-date to hit an all-time high.[.N]

More than 20 billion shares changed hands on U.S. exchanges on Friday, the busiest session since January 2021. Analysts at Bank of America noted that the S&P 500 rises an average of 21% when there is no recession in the 12 months after the Fed begins cutting rates.

Markets are still relishing the impact of the Federal Reserve's half-point rate cut, with futures pointing to a 50% chance the bank will make another big move in November.

“While this move has been the subject of much attention, its significance cannot be overstated, given the Fed’s role in US dollar liquidity conditions around the world,” said Christian Keller, an economist at Barclays.

“We note that starting a cycle with a 50 basis point cut without an imminent financial crisis or actual job losses is unusual for the Fed. Therefore, we believe this move demonstrates the Fed’s determination to avoid a deterioration in labor market conditions, or as the market calls it: a soft landing,” he added.

At least nine Fed policymakers are speaking this week, including prepared remarks from Chairman Jerome Powell, governors and New York Fed President John Williams.

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Much will depend on what the Fed’s preferred inflation gauge, core personal consumption expenditures, shows on Friday. Analysts expect a 0.2% monthly gain, lifting the annual pace of growth to 2.7%, while the headline measure is expected to slow to just 2.3%.

Next week also includes surveys on global manufacturing, U.S. consumer confidence and durable goods.

The Swiss National Bank is due to meet on Thursday and markets are expecting a quarter-point cut to 1.0%, with a 41% chance of a 50 basis point cut.

The Riksbank is due to meet on Wednesday and is also expected to cut interest rates by 25 basis points, with another chance of an increase.

One bank that won’t ease policy is the Reserve Bank of Australia (RBA), which meets on Tuesday and is almost certain to keep interest rates at 4.35% as inflation continues to hold steady. (0#RBAWATCH>

Investors are also watching with caution negotiations to avert a U.S. government shutdown just days before the current $1.2 trillion in funding expires on Sept. 30.

U.S. House Speaker Mike Johnson on Sunday proposed a three-month stopgap funding bill, but it must now come to a vote.

In currency markets, the dollar rose 0.3 percent to 144.30 yen, after rising 2.2 percent last week from a low of 139.58 yen. The euro gained about 3 percent last week to 161.09 yen, while it remained steady against the dollar at $1.1160.

Japan's Liberal Democratic Party, which has a parliamentary majority, is set to elect a new leader on September 27, with the winner set to replace outgoing Prime Minister Fumio Kishida.

Lower U.S. interest rates, coupled with lower bond yields, helped keep gold at an all-time high of $2,630.93 an ounce. [GOL/]

Net long positions on the Comex hit a four-year high last week, suggesting some downside risks in the near term.

Oil prices rose further, supported in part by tensions in the Middle East after Israel struck Hezbollah targets. Oil prices rose about 4% last week on hopes that lower borrowing costs would support global economic growth and demand. [O/R]

The price of a barrel of US West Texas Intermediate crude oil rose 60 cents to $75.09, while it rose 63 cents to $71.63.