Asian stocks rose on Monday, buoyed by a rally in regional chip shares after China banned some purchases from Micron Technology (NASDAQ:MU). Wall Street futures, however, struggled as U.S. debt ceiling negotiations approached crunch time after stalling last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.5%, while Japan’s Nikkei rose 0.8% to fresh 33-year highs, South Korea’s KOSPI gained 0.7% and Hang Kong’s Hang Seng index surged 1.3%.
The rally was supported by President Biden’s remarks that he expected a thaw in frosty relations with China “very shortly” and Beijing’s ban on U.S. firm Micron from selling memory chips to key domestic industries over security concerns.
Market jitters about the upcoming U.S. debt ceiling talks continued, with traders viewing the Japanese yen and gold as best placed to benefit from a U.S. default.
In the Treasuries market, debt ceiling concerns have created large distortions in the short-end of the yield curve as investors avoid bills that come due when the Treasury is at risk of running out of funds. The yield on the 1-month Treasury bill jumped 15 basis points to 5.6677% on Monday.
Oil prices took a hit, with U.S. crude futures down 0.9% to $70.94 per barrel, while Brent crude futures fell 0.8% to $75.01 per barrel. Gold prices were largely unchanged at $1,976.19 per ounce.
Later in the week, the Fed will release minutes of the May meeting on Wednesday, while U.S. personal consumption expenditures (PCE) inflation data is due out on Friday.