Chinese shares led a rally around most of Asia on Monday amid a broadly optimistic global economic backdrop, but Japanese shares tumbled with the yen pinned near levels that have traders on guard for a currency intervention. U.S. stock futures also pointed firmly higher following a market holiday on Friday, when the Federal Reserve released data showing their preferred inflation measure indicated price pressures are further easing, bolstering bets for a June interest rate cut.
Expectations for easier U.S. monetary policy lifted gold to a fresh record high, while crude oil remained firm amid a tighter supply-demand picture, with China's economy improving and expectations of OPEC+ output cuts.
Mainland Chinese blue chips (.CSI300), opens new tab rallied 1.39% as of 0600 GMT, leading regional markets higher after a private survey showed the country's manufacturing activity expanded at the fastest pace in 13 months in March, reinforcing official data on the weekend that showed the first expansion in six months in March.
Singapore's Straits Times Index (.STI), opens new tab added 0.35%, and South Korea's Kospi (.KS11), opens new tab edged up 0.08%. "Tamed" U.S. inflation "may offer some validation for the Fed to kickstart its rate-cutting process sooner rather than later," said Yeap Jun Rong, a market analyst at IG.
"With Wall Street eyeing another run for a new record high, that may keep the broader risk-on sentiments going." However, Japan's Nikkei (.N225), opens new tab tumbled 1.4% as of the close, weighed down by worries about yen-buying intervention that would hurt exporter profit outlooks and returns for foreign investors. The S&P 500 posted its strongest first-quarter performance in five years on Thursday despite U.S. stocks closing little-changed.
A corporate survey showing a worsening mood among big manufacturers gave another reason to sell stocks on the first day of Japan's new fiscal year, with analysts saying investors took the opportunity to book profits with the Nikkei still close to the record peak reached just over a week ago.
U.S. S&P 500 futures added 0.33% and tech-focused Nasdaq futures gained 0.54%. Many markets are closed on Monday for Easter holidays, including Australia and Hong Kong in Asia, and the United Kingdom and Germany.
"Markets may have more upside, but don't expect a straight-line ascent," said Vasu Menon, managing director for investment strategy at OCBC. "Once the U.S. central bank has gained an upper hand over inflation and tamed it decidedly, markets may even be poised for a multi-year rally."
In currencies, the dollar was unchanged at 151.375 yen , remaining near the centre of its narrow trading range over the past week and a half. Official warnings of intervention have stepped up since the yen weakened to a 34-year low of 151.975 per dollar last week, and Japanese Finance Minister Shunichi Suzuki repeated on Monday that he won't rule out any options against excessive moves.
The dollar index , which measures the U.S. currency against six rivals including the yen, edged 0.05% higher to 104.53, hovering close to the six-week high of 104.73 it touched last week. The euro was flat at $1.078675, and sterling was steady at $1.2625.
Leading cryptocurrency bitcoin was little changed at $69,410, and has traded mostly sideways for the past week.
Spot gold was up 1.2% at $2,258.12 per ounce, after hitting an all-time high of $2,265.49 earlier in the session. Brent crude rose 29 cents, or 0.3%, to $87.29 a barrel after rising 2.4% last week. U.S. West Texas Intermediate crude was at $83.48 a barrel, up 31 cents, or 0.4%, following a 3.2% gain last week.
