Asian equities mostly advanced Tuesday following a rally in big tech that spurred a rebound on Wall Street, though an overnight selloff in Treasuries kept risk sentiment in check.
(Bloomberg) — Asian equities mostly advanced Tuesday following a rally in big tech that spurred a rebound on Wall Street, though an overnight selloff in Treasuries kept risk sentiment in check.
Japanese stocks were the biggest gainers while Hong Kong’s Hang Seng Index was set to snap a seven-day run of losses. Shares on China’s mainland fluctuated as the government’s call for increased credit support on some products offered limited boost.
Shares of Asian electric vehicle makers gained after Tesla Inc. was up the most since March on Monday. Semiconductor-related stocks climbed amid optimism over Nvidia Corp.’s earnings due Wednesday. In Australia, BHP Group Ltd. fell after the world’s biggest miner reported a 37% decline in full-year profit, with China’s weak recovery sapping demand for commodities.
The 10-year bond yield in Japan rose to the highest since 2014, raising speculations that the Bank of Japan may come into the market with an unscheduled bond-buying operation to slow gains. Rates were also higher in Australia and New Zealand.
Treasury yields steadied after Monday’s selloff. Investors are awaiting a key speech later in the week by Federal Reserve Chair Jerome Powell as signs of economic strength bolster bets for elevated rates.
The yield on 10-year inflation-protected Treasuries on Monday pushed over 2% for the first time since 2009. Not long after, the yield on 10-year notes without that protection had hit a level last seen in late 2007.
US stock futures were mostly flat after the S&P 500 Index halted a four-day drop Monday and the Nasdaq 100 Index rose about 1.7%. In late US hours, SoftBank Group Corp. semiconductor unit Arm filed for what is set to be this year’s largest US initial public offering.
The dollar weakened against all of its Group-of-10 peers. The yen strengthened, but remained near a level that triggered last year’s first yen-buying intervention since 1998, keeping traders focused on potential comments from currency officials.
The offshore yuan steadied after the People’s Bank of China implemented the strongest fixing on record on the currency as the central bank continues its battle against yuan bears. The one month offshore yuan interbank interest rate jumped to highest since 2018.
Powell will speak Friday at the Kansas City Fed’s Jackson Hole Economic Policy Symposium after officials last month lifted rates to a range of 5.25% to 5.5%, the highest level in 22 years. Minutes from the gathering showed policymakers still saw significant risks that inflation could remain higher than they expect — which could keep rates elevated.
“Each incremental hike that they have from here just raises the risk that we have a much sharper slowdown in 2024 and perhaps even a recession,” Lori Heinel, chief investment officer at State Street Global Advisors, said on Bloomberg Television. “So as long as inflation remains contained, we think that they will take a pause here.”
Two-thirds of 602 respondents in Bloomberg’s latest Markets Live Pulse survey say the Fed has yet to conquer inflation. And over 80% of those surveyed said Powell’s Jackson Hole speech will reinforce the message of a hawkish hold.
The speeches from Fed chiefs at the Jackson Hole conference have typically buoyed stocks since the turn of the millennium, data compiled by Bloomberg Intelligence show. But last year equities slumped 3.2% in the week following Powell’s remarks after he warned of keeping policy restrictive to battle inflation.
Meantime, two of Wall Street’s top strategists are at odds about the outlook for US stocks following a three-week run of declines as debate rages over whether the economy can avoid a recession.
While Morgan Stanley’s Michael Wilson — a stalwart equity bear — says sentiment is likely to weaken further if investors are starting to “question the sustainability of the economic resiliency,” his counterpart at Goldman Sachs Group Inc., David Kostin, says there’s room for investors to further increase exposure if the economy stays on course for a soft landing.
Elsewhere, oil and gold were little changed.
Key events this week:
- US existing home sales, Tuesday
- Chicago Fed’s Austan Goolsbee speaks, Tuesday
- Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
- UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
- US new home sales, S&P Global Manufacturing PMI, Wednesday
- US initial jobless claims, durable goods, Thursday
- Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
- Japan Tokyo CPI, Friday
- US University of Michigan consumer sentiment, Friday
- Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
- S&P 500 futures were little changed as of 1:19 p.m. Tokyo time. The S&P 500 rose 0.7%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.7%
- Japan’s Topix rose 0.7%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng rose 0.2%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures rose 0.5%
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.2% to $1.0916
- The Japanese yen rose 0.1% to 146.01 per dollar
- The offshore yuan was little changed at 7.2923 per dollar
- The Australian dollar rose 0.1% to $0.6422
- Bitcoin fell 0.3% to $26,031.76
- Ether fell 0.5% to $1,662.82
- The yield on 10-year Treasuries was little changed at 4.34%
- Japan’s 10-year yield advanced 1.5 basis points to 0.660%
- Australia’s 10-year yield advanced three basis points to 4.29%
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth and Brett Miller.
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