* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Nikkei rebounds 2.2% after Wall Street rally
* US CPI and Fed Powell are going big this week
* Risk data from China could disappoint after monetary easing
* Lagarde from the ECB says the political guidelines will be changed at the next meeting
Posted by Wayne Cole
SYDNEY, July 12 (Reuters) – Asian stocks rallied on Monday as record highs on Wall Street and monetary easing in China helped ease some of the recent nervousness over global growth, despite many potential pitfalls this week lie to us.
In the United States, inflation data ahead of Federal Reserve Chairman Jerome Powell’s testimony on Wednesday and Thursday could create fear as markets will be overly sensitive to any premature tightening talk.
The reporting season also begins with JP Morgan, Goldman, Citigroup and Wells Fargo reporting.
China is releasing economic growth, trade, retail sales and industrial production figures this week amid concerns it could suppress over the past week’s sudden easing of policy.
“Expectations for China’s outlook have deteriorated over the past month due to some disappointing partial data that was made much worse by the prospect of reaching peak growth from the pandemic recovery,” Westpac analysts said in a note.
“However, annual growth of over 8.0% is expected, and by the second half of 2022 the quarterly growth pulse should stabilize again in the trend.”
For now, investors were happy that last week’s bear market had swung around New York, driving Wall Street up and dampening the bull run in bonds.
On Monday, MSCI’s broadest index for Asia Pacific stocks outside of Japan rose 0.7% after losing 2.3% last week.
Japan’s Nikkei rebounded 2.2%, moving away from a two-month low hit on Friday, while South Korea added 0.9%. Chinese blue chips rose 1.1%.
Nasdaq futures and S&P 500 futures were a fraction easier after their rebound on Friday. The EUROSTOXX 50 futures remained stable, while the FTSE futures fell by 0.2%.
US 10-year bond yields stayed at 1.35% after hitting 1.25% on Friday after eight straight gains.
“The July rally in US rates was remarkable,” said NatWest Markets analysts. “No driver explains the step perfectly … but fears about global growth and the Covid Delta variant had sparked new doubts about inflation.”
This bout of risk aversion had also supported the safe haven of the US dollar until it saw some profit taking on Friday. It last stood at 92.190 for a basket of currencies after hitting a three-month high of 92.844 last week.
The safe haven yen also lost some ground at 110.16 per dollar, while the euro strengthened from last week’s low of $ 1.1780 to $ 1.1869.
European Central Bank President Christine Lagarde surprised the markets on Monday, saying the bank would change its monetary policy guidelines at its next meeting, showing that it is serious about reviving inflation.
The ECB’s new strategy allows it to tolerate inflation above its 2% target when interest rates are close to bottom.
Overall risk-off sentiment helped gold up last week, trading at $ 1,800 an ounce from its low of $ 1,749 in June.
Oil prices stabilized on Monday after ending a volatile week with a rebound as US inventories tightened. Traders are still unsure of the prospects for supplies after the failure of the OPEC talks on restrictions.
Brent most recently fell 18 cents to $ 75.37 a barrel, while US crude fell 16 cents to $ 74.40.
(Editing by Jane Wardell and Jacqueline Wong)