The Topix index jumped about 0.9% while Australian shares fluctuated. US equity futures edged lower after a rally on Friday, when the S&P 500 Index rose for the first time in four days and the tech-heavy Nasdaq 100 saw the biggest one-day gain since November as Google parent Alphabet and Netflix surged. Contracts for European stocks climbed.

Treasuries were little changed in Asia while bond yields moved higher in Australia and New Zealand, tracking moves in the US debt market on Friday. Japan’s benchmark 10-year yield fell one basis point to 0.39%, well below the 0.5% ceiling set by policy makers in Tokyo.  

“The Bank of Japan will continue to be that central bank that stands on its own and tries to almost sing its own tune,” Katrina Ell, an economist at Moody’s Analytics, said on Bloomberg Television. “Domestic demand in Japan still is incredibly soft, so they are trying to resist that tightening urge that we’ve seen from other developed and even developing economies.”

The yen rose about 0.3% amid the broad weakness in the greenback. Traders in global markets across multiple asset classes have been taking cues from US central bankers. Federal Reserve governor Christopher Waller said on Friday that policy looked pretty close to sufficiently restrictive and he backed moderation in the size of rate increases. Philadelphia Fed president Patrick Harker repeated his view for more incremental steps in rate hikes and Kansas City Fed chief Esther George said the economy can avoid a sharp downturn.

Yet as optimism rises, US financial conditions have become less restrictive, raising another potential challenge to efforts to tame inflation that may give policymakers reason to rethink their views.

IG Markets analyst Hebe Chen said traders are “trying to downplay the fundamental shortcomings” in the outlook. She doesn’t expect the Fed to cut rates this year, she said on Bloomberg Television. Chen also cautioned that while China’s reopening is positive, this won’t fix all the problems its economy faces, including troubles in the property sector.

New Zealand’s shares benchmark fell and the nation’s currency rose after the Labour Party endorsed a replacement for Jacinda Ardern as prime minister. The new leader, Chris Hipkins, is expected to prioritise the economy as a recession looms after a series of sharp interest rate hikes.

Elsewhere, oil edged lower as investors assessed the outlook for demand following China’s reopening and risks to Russian output in 2023. Gold edged higher.

Financial markets trading in Asian hours are likely to be thinner than usual with major centres including Hong Kong, Shanghai, Singapore and Seoul closed for Lunar New Year celebrations Monday. Many regional markets will remain closed until midweek and mainland China trading won’t resume until 30 January.

Key events this week:

• Earnings for the week include: Abbott Laboratories, American Airlines, American Express, AT&T, Blackstone, Boeing, Colgate-Palmolive, Freeport-McMoRan, General Electric, Intel, International Business Machines, Johnson & Johnson, LVMH Moet Hennessy Louis Vuitton, Mastercard, Nokia, SAP, Southwest Airlines, Texas Instruments, Verizon Communications, Visa
• Euro area consumer confidence, Monday
• US Conference Board leading index, Monday
• ECB president Christine Lagarde speaks, Monday
• PMIs for US, euro area, UK, Japan, Tuesday
• Richmond Fed Manufacturing, Tuesday
• ECB president Christine Lagarde speaks, Tuesday
• US MBA mortgage applications, Philadelphia Fed non-manufacturing activity, Wednesday
• US fourth-quarter GDP, new home sales, initial jobless claims, good trade balance, durable goods, wholesale inventories, retail inventories, Thursday
• Japan Tokyo CPI, Friday
• US personal income/spending, University of Michigan consumer sentiment, pending home sales, Friday

Here are some of the main market moves:

Stocks

• S&P 500 futures fell 0.1% of 11.45am Tokyo time. The S&P 500 rose 1.9% on Friday.
• Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 2.9% on Friday
• Japan’s Topix index rose 0.9%
• Australia’s S&P/ASX 200 Index rose 0.1%

Currencies

• Bloomberg Dollar Spot Index fell 0.2% to 1,221.88
• The euro rose 0.4% to $1.0896
• The Japanese yen rose 0.4% to 129.12 per dollar
• The Australian dollar rose 0.3% to $0.6986

Bonds

• The yield on 10-year Treasuries declined one basis point to 3.47%
• Japan’s 10-year yield fell one basis point to 0.39%
• Australia’s 10-year yield advanced six basis points to 3.46%

Commodities

• West Texas Intermediate crude fell 0.5% to $81.26 a barrel
• Spot gold rose 0.4% to $1,934.02 an ounce. BM/DM