(Bloomberg) — Stocks in Asia rose for a second session as markets shifted their focus this week to key U.S. data prints for more insight into the health of the world’s largest economy.
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A gauge of the region’s stocks rose on Monday, following Friday’s 1.5% gain, as benchmarks in Australia, Taiwan and South Korea moved higher. Stocks in Hong Kong fluctuated, while those on the mainland were little changed. The Japanese markets were closed for a holiday.
A semblance of calm returned after markets were battered early last week by fears that the Federal Reserve would wait too long to cut interest rates. The Cboe Volatility Index – Wall Street’s fear gauge – has reached its highest point since the early days of the Covid-19 pandemic. The yen was slightly weaker against the dollar on Monday.
“The skies are not yet completely clear, but there are several reasons that suggest relatively calmer seas lie ahead,” Nomura Holdings Inc. analysts said. in a note, citing a decline in recession fears in the US. lower chances of a very aggressive Bank of Japan as a reason for optimism.
The yen rose last week as traders cut their bearish bets after the BOJ’s rate hike, creating a negative feedback loop as investors dumped carry trades that bounced around the markets before little changed last week.
The BOJ and Fed are the biggest variables driving trade, said Taosha Wang, portfolio manager at Fil Asia Holdings Pte Ltd. For the US, “I don’t think the market agrees with that – either a recession, which we think is excessive or a soft landing,” she told Bloomberg Television’s Yvonne Man and David Ingles on Monday.
Elsewhere in Asia, traders will focus on Chinese retail sales and industrial production data this week to gauge whether the country’s economy is finding traction.
China continues to struggle with speculators in the bond market, with state banks selling debt to boost interest rates. Government bond yields recovered last week after authorities intensified their fight against bond bulls. The economy needs more stimulus as the latest leading indicators point to a loss of recovery momentum around mid-year, according to Bloomberg Economics.
New Zealand’s central bank will also decide on policy this week as the economy shows signs of entering its third recession in less than two years. Australian and New Zealand government bonds were little changed on Monday. Cash trading in government bonds was closed in Asia due to the Tokyo holiday.
Economic downturn
A tumultuous week for global bond markets, which moved towards calm on Friday as concerns about the potential economic downturn in the US – which led to a rally in US government bonds and a brief market slump – subsided.
The US consumer price index is expected to have risen 0.2% on Wednesday from June, both for the nominal figure and for the so-called core gauge that excludes food and energy. However, these modest measures may not be enough to derail the Fed from a widely expected rate cut next month.
Over the weekend, Fed Governor Michelle Bowman said she still sees upside risks to inflation and continued strength in the labor market, signaling she may not be ready to support a rate cut when U.S. central bankers meet again in September . Money markets have fully priced in a September rate cut and an easing of about 100 basis points this year, according to swap data from Bloomberg.
In the commodities sector, oil prices rose on Monday after rising 4.5% last week. Some of the largest oil refineries in the US have scaled back operations at their facilities this quarter, adding to concerns about the emergence of a global crude glut. Gold was lower.
Some important events this week:
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RBA Deputy Governor Andrew Hauser speaks on Monday
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India CPI, industrial production, Monday
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Consumer confidence in Australia, Tuesday
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Japanese PPI, Tuesday
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Unemployment South Africa, Tuesday
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UK unemployment claims, unemployment, Tuesday
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Home Depot earnings, Tuesday
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US PPI, Tuesday
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Atlanta Fed President Raphael Bostic speaks Tuesday
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Eurozone GDP, industrial production, Wednesday
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New Zealand interest rate decision, Wednesday
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Unemployment rate South Korea, Wednesday
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Poland CPI, Wednesday
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British CPI, Wednesday
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US CPI, Wednesday
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Australian unemployment, Thursday
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Japan’s GDP, industrial production, Thursday
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Philippines interest rate decision on Thursday
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House prices in China, retail sales, industrial production, Thursday
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Tariff decision Norway, Thursday
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British industrial production, GDP, Thursday
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US initial unemployment claims, retail sales, industrial production, Thursday
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St. Louis Fed President Alberto Musalem and Philadelphia Fed President Patrick Harker speak Thursday
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Alibaba Group, Walmart earnings, Thursday
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Hong Kong unemployment rate, GDP, Friday
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Taiwan’s GDP, Friday
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Start of the US housing market, consumer confidence from the University of Michigan, Friday
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Chicago Fed President Austan Goolsbee will speak on Friday
Some of the major moves in the markets:
Stocks
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Futures on the S&P 500 were little changed at 11:05 a.m. Tokyo time
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Nikkei 225 futures (OSE) rose 0.7%
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Australia’s S&P/ASX 200 rose 0.5%
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Hong Kong’s Hang Seng fell 0.3%
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The Shanghai Composite had changed little
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Euro Stoxx 50 futures rose 0.4%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0920
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The Japanese yen fell 0.2% to 146.96 per dollar
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The offshore yuan was little changed at 7.1759 per dollar
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The Australian dollar was little changed at $0.6584
Cryptocurrencies
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Bitcoin fell 0.1% to $58,455.91
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Ether fell 0.6% to $2,541.87
Bonds
Raw materials
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West Texas Intermediate crude rose 0.3% to $77.07 a barrel
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Gold fell 0.3% to $2,424.86 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Richard Henderson.
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