By Wayne Cole

SYDNEY (Reuters) – Asian stocks got a cautious start on Monday to a week when interest rates are sure to rise in Europe and the United States, along with US jobs and wages data that could affect how far they have to go.

Earnings from a who’s who of tech giants will also test Wall Street bulls looking to push the Nasdaq to its best January since 2001.

Asia was not sluggish either, with China’s swift reopening bolstering the economic outlook, with MSCI’s broadest index of Asia-Pacific stocks outside of Japan rising 11% to a nine-month high in January.

Early Monday, the index rose 0.1% as investors looked forward to the Chinese market’s rebound after the Lunar New Year holiday, while Japan’s Nikkei rose 0.2%.

S&P 500 futures and Nasdaq futures both fell 0.1%.

Investors are confident that the Federal Reserve will hike rates by 25 basis points on Wednesday, followed by a half-point hike by the Bank of England and the European Central Bank the following day, and any deviation from that script would come as a real shock .

Equally important will be the guidance for future policy, as analysts expect hawkish inflationary news is not yet over and more needs to be done.

“With US job markets still tight, core inflation high and financial conditions easing, Fed Chair Powell’s tone will be hawkish, emphasizing that a downgrade to a 25 basis point hike doesn’t mean a pause is coming ‘ said Bruce Kasman, chief economist at JPMorgan, who expects another rise in March.

“We also expect him to continue cracking down on market pricing for rate cuts later this year.”

There is work to be done as futures rates currently peak at 5.0% in March only to fall back to 4.5% by the end of the year.

EYEING APPLE

Yields on 10-year notes are down 31 basis points to 3.518% so far this month, essentially easing financial conditions even as the Fed looks to tighten.

This dovish outlook is also being tested by data on US payrolls, the employment cost index and various ISM surveys.

As for Wall Street’s recent rally, much will depend on gains from Apple Inc, Amazon.com, Alphabet Inc and Meta Platforms, among many others.

“Apple will provide an insight into the overall demand history for consumers worldwide and provide a snapshot of China supply chain issues that are beginning to ease,” analysts at Wedbush wrote.

“Based on our recent supply chain reviews in Asia, we believe demand for the iPhone 14 Pro is stronger than expected,” they added. “Apple will likely cut some costs on the fringes, but we don’t expect any mass layoffs.”

Market pricing for the Fed’s early easing has weighed on the dollar, which is down 1.5% against a basket of major currencies so far this month.

The euro is up 1.4% in January to $1.0870, just below a nine-month high. The dollar is even down 1% against the yen to 129.92, despite the Bank of Japan’s dogged defense of its super-loose policy.

The decline in the dollar and yields has been a boon for gold, which is up 5.6% month to date to $1,928 an ounce. [GOL/]

China’s quick reopening is seen as a boon for commodities in general, supporting everything from copper to iron ore to oil prices. [O/R]

Beijing reported that Lunar New Year travel within China rose 74% year-on-year, although that was still only half of pre-pandemic levels.

Early Monday, Brent was up 79 cents at $87.45 a barrel, while US crude was up 66 cents at $80.34.