(Bloomberg) — Stocks in Asia rose for a second session as markets shifted focus to key U.S. data this week for more information on the health of the world’s largest economy.
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A stock gauge for the region rose on Monday following Friday’s 1.5% gain, with benchmarks in Australia, Taiwan and South Korea rising. Stocks in Hong Kong fluctuated, while those on the mainland were little changed. Japanese markets were closed for a public holiday.
A semblance of calm has returned after markets were devastated early last week by fears that the Federal Reserve was waiting too long to cut interest rates. The Cboe Volatility Index – Wall Street’s fear gauge – has reversed to its highest level 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 some relatively calmer seas lie ahead,” analysts at Nomura Holdings Inc. said in a note, citing easing fears about a U.S. recession and lower chances of a very aggressive Bank of Japan as one of the reasons for optimism.
The yen rose last week as traders reduced bearish bets following the BOJ rate hike, forcing a negative feedback loop as investors exited carry trades that ricocheted across markets, before ending last week with few changes.
The BOJ and Fed are the biggest variables driving the trades, said Taosha Wang, portfolio manager at Fil Asia Holdings Pte Ltd. For the U.S., “I don’t think the market has agreed – or a recession, which we view as excessive.” . , or a soft landing,” she told Bloomberg Television’s Yvonne Man and David Ingles on Monday.
Elsewhere in Asia, investors will be focusing on China’s retail sales and industrial production data this week to gauge whether the country’s economy is finding strength.
China is still battling bond market speculators, with state banks selling debt to boost yields. Sovereign yields rebounded last week after authorities stepped up their fight against bond bulls. The economy needs more stimulus as the latest leading indicators point to a loss of recovery momentum by mid-year, according to Bloomberg Economics.
New Zealand’s central bank will also decide policy this week, with the economy showing signs of entering its third recession in less than two years. Australian and New Zealand government bonds were little changed on Monday. Spot trading in Treasury bonds was closed in Asia due to the holiday in Tokyo.
Economic recession
A tumultuous week for global bond markets turned to calm on Friday as angst over the potential US economic recession – which spurred a Treasury rally and brief market meltdown – faded.
The U.S. consumer price index is expected to have risen 0.2% on Wednesday from June, both for the headline value and for the so-called core indicator that excludes food and energy. The modest measures, however, may not be enough to steer the Fed away from a widely anticipated interest 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 that she may not be prepared to support an interest rate cut when US central banks USA meet in September. Money markets have fully priced in a rate cut in September and about 100 basis points of easing for the year, according to swaps data compiled by Bloomberg.
In commodities, oil rose on Monday after a 4.5% gain last week. Some major U.S. oil refiners are reducing operations at their facilities this quarter, raising concerns that a global glut of crude oil is building. Gold was lower.
Some important events this week:
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RBA Deputy Governor Andrew Hauser Speaks, Monday
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India CPI, industrial production, Monday
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Australian consumer confidence, Tuesday
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Japan PPI, Tuesday
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Unemployment in South Africa, Tuesday
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UK jobless benefit 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 rate decision Wednesday
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Unemployment rate in South Korea, Wednesday
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CPI Poland, Wednesday
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UK CPI Wednesday
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US CPI Wednesday
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Unemployment in Australia, Thursday
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Japan GDP, industrial production, Thursday
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Philippines rate decision Thursday
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China home prices, retail sales, industrial production, Thursday
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Norway rate decision, Thursday
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UK industrial production, GDP, Thursday
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U.S. 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 GDP, Friday
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US Housing Starts, University of Michigan Consumer Sentiment, Friday
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Chicago Fed President Austan Goolsbee Speaks Friday
Some of the main movements in the markets:
Actions
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S&P 500 futures were little changed as of 11:05 a.m. Tokyo time
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Nikkei 225 (OSE) futures 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 Compound has changed little
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Euro Stoxx 50 futures rose 0.4%
Coins
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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
Titles
Goods
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West Texas Intermediate crude rose 0.3% to $77.07 a barrel
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Spot gold fell 0.3% to $2,424.86 an ounce
This story was produced with help from Bloomberg Automation.
–With assistance from Richard Henderson.
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