Australia

Australian shares are expected to climb today after a positive day in the US. Investors adopted a hopeful mood as they expect the Federal Reserve to keep interest rates unchanged at its upcoming meeting.

ASX futures were higher as of 7:00am on Tuesday, having gained 25 points or 0.4%.
US stocks climbed Monday, driving the S&P 500 to its highest level in more than a year, as investors looked ahead to a busy stretch packed with key economic reports and the Federal Reserve's latest interest rate decision.

Coming off its fourth straight week of gains, the S&P 500 rose 0.9% to 4338.93, its highest close since April 2022. The Dow Jones Industrial Average ticked up 0.6%, or about 190 points, while the tech-heavy Nasdaq Composite advanced 1.5%. Canadian stocks also gained, with the S&P/TSX Composite adding 29 points or 0.2%.

After getting pummeled last year by a rapid rise in interest rates, stocks have recovered this year thanks in part to a stronger-than-expected economy and hopes that rates might not have much further to climb. Shares of a few big technology companies have led the way, buoyed by booming interest in businesses involved with artificial intelligence. But the rally has broadened in recent days, with investors flocking to previously beaten-down stocks such as the online used-car retailer Carvana.

In commodity markets, Brent crude oil slid 3.8% to US$71.98 a barrel while gold dropped 0.2% to US$1,957.48.

Australian government bonds were unchanged, with the 2 Year yield at 3.99% and the 10 Year yield at 3.95%. US Treasury notes were higher, with the 2 Year yield increasing to 4.58% and the 10 Year yield rising to 3.74%.

The Australian dollar increased to 67.54 US cents from its previous close of 67.39. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, inched up to 97.32.

Asia

Chinese shares ended Monday mixed, extending their recent range bound trading pattern. The market has had a mixed bag of signals recently. While sentiment has been weighed by further worries over the pace of China's macroeconomic recovery, many analysts point to potential new buying interest emerging due to the market's low valuations after a previous selloff. The benchmark Shanghai Composite Index edged down 0.1% to 3228.83 while the Shenzhen Composite Index added 0.7% and the ChiNext Price Index climbed 0.4%. Banks were among the top losers, as Bank of China shed 2.2% and Bank of Communications lost 2.6%. Home appliance makers led gainers, with Bear Electric Appliance rising 4.35%.

Hong Kong shares ended the session higher, sustaining a recovery over recent sessions. Analysts have been optimistic that the market is likely able to sustain the rebound in the near term. Following sharp losses since mid-April, Hong Kong equities now look attractively valued and the risk-reward profile appears promising, GF Securities analysts said. The benchmark Hang Seng Index rose 0.7% to settle at 19404.31. A wide range of sectors offered support for the market. Solar energy company Xinyi added 2.9% and tourism agency Trip.com was up 2.6%.

Japanese stocks ended higher, with the Nikkei Stock Average rising 0.5% to close at 32434.00, as investors awaited major economic data and central bank meetings this week. With inflation still more than double central banks' target rates, it remains unclear whether the Fed can afford the luxury of a pause, or whether it will be more cautious given China's deflation, CMC Markets analyst Michael Hewson wrote. Best performers on Japan's benchmark index included Daiichi Sankyo, which rose 4.05%, Mitsubishi Heavy Industries, which added 3.85%, and Advantest, which was up 2.9%.

Indian equities gained, with the benchmark Sensex index closing 0.2% higher at 62724.71. Investors are likely awaiting the release of key economic data and the outcome of the US Federal Reserve's rate decision this week, ICICI Direct analysts said in a research report. Technology shares rose during the session. HCL Technologies climbed 2.6%, Infosys added 2.05% and Tata Consultancy Services gained 1.2%. Decliners included Larsen & Toubro, which fell 1.0%.

Europe

European stocks gained amid cautious optimism as investors awaited central bank interest rate decisions later this week. The pan-European Stoxx Europe 600 advanced 0.1%, the French CAC 40 increased 0.5% and the German DAX climbed 0.9%.

"Stocks have opted to continue their move higher for the time being, expecting US inflation to cool slightly and the Fed to leave rates unchanged," IG analyst Chris Beauchamp wrote. "Should those assumptions prove wrong, we can expect significant volatility across stocks and in the US dollar. But OPEC's recent production cut has fizzled out dramatically and as oil demand estimates get revised down again, the outlook for commodity stocks seems grim."

Meanwhile, in London, the FTSE 100 Index closed up 0.1% to 7570 points in a positive start to the week for financial markets, despite a slip in miners and oil-exposed stocks. Retailer Ocado led the FTSE’s top risers, closing up 3.6% after BNP Paribas upgraded its rating on the stock to neutral from underperform, followed by Croda International and Auto Trader, up 3.2% and 3.1% respectively.

North America

US stocks climbed Monday, driving the S&P 500 to its highest level in more than a year, as investors looked ahead to a busy stretch packed with key economic reports and the Federal Reserve's latest interest rate decision.

Coming off its fourth straight week of gains, the S&P 500 rose 0.9% to 4338.93, its highest close since April 2022. The Dow Jones Industrial Average ticked up 0.6%, or about 190 points, while the tech-heavy Nasdaq Composite advanced 1.5%. Canadian stocks also gained, with the S&P/TSX Composite adding 29 points or 0.2%.

After getting pummeled last year by a rapid rise in interest rates, stocks have recovered this year thanks in part to a stronger-than-expected economy and hopes that rates might not have much further to climb. Shares of a few big technology companies have led the way, buoyed by booming interest in businesses involved with artificial intelligence. But the rally has broadened in recent days, with investors flocking to previously beaten-down stocks such as the online used-car retailer Carvana.

Stocks face a major test this week. Consumer-price index data on Tuesday will provide insight into the direction of inflation, which remains well above the Fed's 2% annual target. After that, the Fed on Wednesday is widely expected to keep interest rates steady but could signal more rate increases in the future. Thursday will bring a rate decision by the European Central Bank, as well as US retail sales data.

Some investors are skeptical that stocks can keep rising. Many have pointed to the narrowness of this year's rally as a cause for concern, noting that indices can more easily reverse when they are relying on just a handful of winners. More recently, the broadening of the rally has struck some as encouraging but failed to convince others, who see in it more last-gasp profit-chasing than fundamental strength.

Many individual investors "like to buy those beaten down stocks because they feel the upside is bigger," said Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management. The pessimistic view of this month's surge in smaller-cap stocks is that investors are "just buying anything to catch up to the rally," he added.

Monday's gains spanned a mixture of old and new winners. Tech giants such as Meta Platforms, Alphabet and Nvidia climbed. Tesla shares finished up 2.2% at $249.83, extending their winning streak to 12 sessions -- the longest on record, according to Dow Jones Market Data.

Among the newly ascendant, Carvana climbed 11%, building off its strong performance last week after it said it expects to post improved profit metrics in the second quarter. Cruise operator Carnival rose 12% after JPMorgan analysts upgraded the stock to overweight from neutral. Shares in several airline companies also posted strong gains.

Interest rate futures on Monday suggested investors believed there was a better than 75% chance that the Fed would keep interest rates unchanged this week, according to CME Group data, but a roughly 70% chance that it will resume lifting rates at its next meeting in July.