Investors await key economic data this week, including sales and earnings from major retailers.
ASX futures were unchanged as of 6:00am on Tuesday morning.
North America
US stocks moved higher Monday as investors monitored debt ceiling negotiations, coming off two consecutive losing weeks for the S&P 500.
The S&P 500 added 0.3%, the Dow Jones Industrial Average ticked up 0.1% and the tech-heavy Nasdaq Composite rose 0.7%.
The major indices wobbled between small gains and losses throughout Monday's session as the US faces a potentially economy-shaking default. The Treasury Department and Congressional Budget Office have warned that the US could become unable to pay its bills as soon as June 1 if Congress fails to raise the federal borrowing limit.
US Treasury Secretary Janet Yellen said over the weekend that negotiations over raising the debt ceiling were making progress and could result in a deal.
Still, Republicans and Democrats remain at a standoff as a possible default edges closer. A second meeting between President Biden and congressional leaders that was originally set to take place Friday was postponed until early this week. The House and Senate are scheduled to be in session simultaneously for just one more week this month. Republican leaders have so far rejected any short-term debt deal to buy more time.
"Everyone is on tenterhooks with regard to the debt ceiling," said Jon Maier, chief investment officer at Global X ETFs. "There seems to be rays of hope, but there's still no clear path to avoid technical default."
The recent muted trading action in stocks signals jitters among investors. The S&P 500 has not logged a weekly move of more than 1% in either direction for six straight weeks, the longest such streak since 2019, according to Dow Jones Market Data.
Investors also parsed data showing a sharp drop-off in manufacturing in New York state. The Empire State Manufacturing Survey dropped to negative 31.8 in May from a positive 10.8 the prior month. Negative readings denote economic contraction, and analysts had expected a more encouraging reading this month.
More insights into the health of the US economy are on deck, with retail data and earnings due this week. April retail sales data is slated for release Tuesday morning, while Walmart, Home Depot and Target are set to report quarterly results this week.
"Those reports are going to be very important in terms of taking the pulse of the consumer. The expectation right now is that the consumer side is still pretty stable. The risk is to the downside," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
Commodities & Bonds
In commodity markets, Brent crude oil gained 1.3% to US$75.15 a barrel while gold added 0.2% to US$2,015.36.
Australian government bonds moved higher, with the 2 Year yield climbing to 3.25% and the 10 Year yield increasing to 3.42%. Meanwhile, US Treasury notes declined, with the 2 Year yield slipping to 4.00% and the 10 Year yield falling to 3.49%.
The Australian dollar jumped to 66.99 US cents from its previous close of 66.40. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, slipped to 96.34.
Asia
Chinese shares ended higher, reversing earlier losses, ahead of key April economic data. Retail sales, industrial production and fixed asset investment data are due Tuesday. Consumption sectors rose, with China Tourism Group Duty Free adding 1.7% and BTG Hotels rising 1.2%. Insurers rallied amid broad optimism among financial stocks. China Life Insurance rose 9.1% and Ping An Insurance climbed 4.8%. The media sector was among decliners, as Mango Excellent Media slid 5.9%. The Shanghai Composite Index ended 1.2% higher at 3310.74. The Shenzhen Composite Index also rose 1.2% and the ChiNext Price Index advanced 2.1%.
Hong Kong shares also ended higher, as investors awaited economic data and speeches by various Federal Reserve officials. The Hang Seng Index rose 1.8% to 19771.13, with insurers and tech companies leading gains. Ping An Insurance climbed 3.9%, Tencent advanced 3.9% and Meituan gained 3.4%. The Hang Seng Tech Index added 1.3%. Consumption stocks also climbed, with China Resources Beer rising 4.6% and Haidilao International up 2.2%.
Japan's Nikkei Stock Average rose 0.8% to close at 29626.34 amid yen weakness, with gains relatively broad-based. The best performers included healthcare company Sysmex and food maker Ajinomoto, adding 5.0% each, and insurer Dai-ichi Life, gaining 4.5%. Shiseido climbed 5.2% after Q1 net profit nearly doubled on year, and Asahi Group was 3.4% higher after its Q1 net profit more than quadrupled. Meanwhile, Olympus Corp. fell 6.8% after Q4 net profit missed analysts' estimates.
Indian shares ended higher, with the benchmark Sensex index hitting its highest closing level in months. The index rose 0.5% to settle at 62345.71. IT-services providers led gains. Tech Mahindra added 1.9% and Infosys climbed 1.1%. Auto makers also supported the market, with Tata Motors rising 2.9%. The company's gains came after it posted Q4 net profit, compared with a net loss a year earlier. Mahindra & Mahindra added 0.8%.
Europe
European stocks traded mixed along with US equities as investors monitored federal debt ceiling developments and digested economic data. The pan-European Stoxx Europe 600 closed up 0.2% while Germany’s DAX and France’s CAC 40 traded flat.
The United Kingdom’s FTSE 100 rose 0.3% as gains for mining and banking stocks offset losses for oil majors. Anglo American, BHP, Glencore, Antofagasta and Rio Tinto were among the mining sector's biggest risers. Asia-focused financial stocks HSBC and Prudential also gained.
"Japan’s Nikkei has rallied to a fresh 18-month high, pushing above 29,600 with financials leading the gains," Interactive Investor's head of investment Victoria Scholar wrote. "Better-than-expected producer price data, as well as stronger Japanese earnings and improved share buybacks, have supported its equity index." Still, Shell and Harbour Energy traded lower even as Brent crude rose.
