The adrenaline from the Federal Reserve’s bold interest rate cut and signal of intent to keep easing still appears to be coursing through global financial markets, which should see risk assets in Asia start the week on a strong footing on Monday.

Nikkei futures are pointing to a rise of more than 1% at the open in Japan, with Japanese shares also getting a boost from the yen’s slide last week. The rise in longer-dated U.S. Treasury yields, however, could temper some of the optimism.

Friday’s monetary policy decisions from Japan and China may also reverberate around Asian markets on Monday, and on that score, the picture is more mixed.

As was widely expected, the Bank of Japan decided not to raise rates, but it signaled it is in no hurry to raise them again. This helped push the yen to its weakest daily close since September 4, which in turn helped lift Japanese stocks.

The People’s Bank of China also left rates on hold but this was more of a surprise. Domestically, China’s weak economic and inflation dynamics appear to be screaming out for lower rates, and internationally, the Fed’s outsized rate cut of 50 basis points gave the PBOC cover to move.

Source: LSEG, opens new tab – data delayed by at least 15 minutes