Asian stocks rose on Monday, supported by record closes on Wall Street, while the dollar rebounded from multi-week lows against the yen and sterling, in a crucial week for the outlook for US rates. interest in the United States.
Chinese stocks received a further boost from positive results from a private manufacturing survey on Monday, confirming the strength of official manufacturing data released over the weekend.
The new US President Donald Trump supported the dollar by warning emerging BRICS countries against any attempt to replace the greenback with another currency.
“There will be two drivers of market volatility this month. The first remains the impact of Trump, particularly future tax settings and, increasingly, looming trade wars,” said analyst Kyle Rodda Principal of Financial Markets at Capital.com.
“The second is what the US Federal Reserve will do with its policy this month,” Rodda said. If the Fed cuts and gives sufficiently optimistic guidance, it could kick off a sort of “Santa rally.”
The euro was heavy on the risk of an imminent collapse of the French government, with Prime Minister Michel Barnier facing a Monday deadline to make more budgetary concessions or face a vote of no confidence.
Hong Kong's Hang Seng gained 0.9%, and mainland China's blue chips added 0.6% by 0153 GMT.
The Caixin/S&P Global manufacturing PMI rose to 51.5 in November from 50.3 the previous month, the highest since June and beating analysts' forecast of 50.5 in a Reuters poll.
The reading largely echoed an official survey on Saturday, which showed manufacturing activity rose modestly, suggesting a stimulus blitz is finally spreading across the world's second-largest economy.
Australia's stock index gained 0.3%, closing in on last week's record high. South Korea's KOSPI index rose 0.3%.
Japan's Nikkei fell 0.3%, led by a 3.6% fall in Fast Retailing, owner of the heavily weighted Uniqlo brand. The broader Topix index, on the other hand, increased by 0.4%.
Yields on Japanese government bonds rose to a 16-year high after Bank of Japan Governor Kazuo Ueda said in an interview published over the weekend that another rate hike was “imminent as the economic data is on track.
The market odds of a quarter-point increase this month stood at about 64%.
The two-year JGB yield rose 3 basis points to 0.625%, its highest level since November 2008.
However, Ueda also told the Nikkei that the central bank wanted to take a close look at developments in the U.S. economy because there was a “big question mark” over its prospects, such as the fallout from the increase tariffs proposed by Mr. Trump.
The dollar index, which measures the currency against six major rivals, rose 0.2% to 106.23.
The dollar rose 0.5% to 150.53 yen, rebounding from Friday's low of 149.47 yen, a level last reached on Oct. 21.
Sterling fell 0.4% to $1.2690, after hitting $1.2750 on Friday for the first time since November 13.
The euro fell 0.4% to $1.0530. On Friday, it reached its highest level since November 20, at $1.0597.
Far-right French National Rally MP Marine Le Pen said on Sunday that Mr Barnier had until Monday to make further budgetary concessions to avoid a motion of no confidence that would lead to the collapse of the government.
At the same time, the outlook for monetary policy weighed on the single currency.
The European Central Bank is expected to cut rates this month, with markets estimating there is a 27% chance it will cut rates by even 50 basis points on December 12.
The Federal Reserve is also in focus, with Friday's monthly jobs report expected to inform the central bank on whether it will cut rates again on Dec. 18.
A number of Fed officials are scheduled to speak this week, including Fed Chairman Jerome Powell on Wednesday. Traders currently estimate the chance of a quarter-point cut to be around 66%.
In a holiday-shortened session Friday, the S&P 500 and Nasdaq rose 0.6% and 0.8%, respectively, to close at their all-time highs. S&P 500 futures forecast a slightly lower reopening for Monday.
In cryptocurrencies, ether inched closer to Sunday's near six-month high of $3,748, and was last trading at $3,726, up 3. 7%.
Bitcoin rose as high as $97,863, closing in on the November 22 record high of $99,830.
Gold fell 0.7% to $2,635.50 under pressure from a strong dollar.
Oil prices rose slightly, supported by Chinese manufacturing data and the resumption of Israeli attacks on Lebanon despite a ceasefire agreement.
Brent futures rose 11 cents to $71.95 a barrel, while U.S. West Texas Intermediate oil was at $68.14 a barrel, up 14 cents.
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