Asian shares were enjoying a relief rally on Monday as record highs on Wall Street and policy easing in China helped calm some of the recent jitters on global growth, though plenty of potential pitfalls lay ahead this week.
In the United States, inflation data could provide a scare ahead of testimony by Federal Reserve Chair Jerome Powell on Wednesday and Thursday, where markets will be hypersensitive to any talk of early tapering.
The earnings season also kicks off with JP Morgan, Goldman, Citigroup, and Wells Fargo among those reporting.
China releases figures on economic growth, trade, retail sales, and industrial output amid concerns they could underwhelm given the sudden easing in policy last week.
For now, investors were happy that last week’s burst of bearishness had swung around in New York, sending Wall Street higher and tempering the bull run in bonds.
On Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.9%, after shedding 2.3% last week.
Japan’s Nikkei bounced 2.3%, and away from a two-month trough touched on Friday, while South Korea added 0.9%. Chinese blue chips rose 1.7%.
Nasdaq futures and S&P 500 futures were little changed following their recovery on Friday.
Yields on U.S. 10-year notes were steady at 1.362%, having been as low as 1.25% on Friday following eight straight sessions of price gains.
That bout of risk aversion had also supported the safe-haven U.S. dollar until it ran into some profit-taking on Friday. It was last at 92.147 on a basket of currencies, after touching a three-month top of 92.844 last week.
The safe-haven yen also lost some ground to 110.18 per dollar, while the euro firmed to $1.1871 from last week’s low at $1.1780.
European Central Bank President Christine Lagarde caught markets by surprise on Monday saying the bank will change its guidance on policy at its next meeting and show it is serious about reviving inflation.
The ECB’s new strategy allows it to tolerate inflation higher than its 2% goal when rates are near rock bottom.
The general risk-off mood helped gold higher last week and it was trading at $1,805 an ounce compared with its June trough of $1,749.
Brent was last down 4 cents at $75.51 a barrel, while U.S. crude stood unchanged at $74.56.