Asian equities traded mixed as Wall Street’s risk-on mood faded a day after the rally in big tech. Chinese markets returned under pressure despite fresh signs of an earnings recovery among the country’s tech giants.
(Bloomberg) — Asian equities traded mixed as Wall Street’s risk-on mood faded a day after the rally in big tech. Chinese markets returned under pressure despite fresh signs of an earnings recovery among the country’s tech giants.
Shares fell in Hong Kong and mainland China, following a sudden rally Tuesday. Benchmark gauges in Japan and Australia held on to modest gains.
The selling in China came even as Baidu Inc. released financial results that showed its revenue rose the most in more than a year. The company reported a larger-than-projected jump in sales for the June quarter as its net income rose 43%.
US stock futures advanced in Asia while investors awaited Nvidia Corp.’s results later Wednesday. Analysts are predicting that the company’s second-quarter revenue may come in higher than the forecast it gave three months ago.
In a sign of how significant Nvidia’s results will be, the options market is bracing for a move of about 10% following the results. With Nvidia accounting for over 3% of the S&P 500, the stock action will possibly have broader implications. The shares briefly touched an all-time high Tuesday.
The S&P 500 extended its August slide Tuesday. Banks dropped as S&P Global Ratings joined Moody’s Investors Service in cutting some US lenders amid a “tough climate.
Treasuries gained in Asia, with the 10-year paper rising for a second day. Wider markets are also marking time ahead of a speech from Federal Reserve Chair Jerome Powell on Friday. Resilient US economy so far has investors positioning for the Federal Reserve to keep borrowing costs elevated.
As Wednesday’s 20-year Treasury auction approaches and Jackson Hole nears, “we’re open to the interpretation that sellers’ fatigue is beginning to set in,” BMO Capital Markets strategists Ben Jeffery and Ian Lyngen said in a note.
“In the event of a strong bid for either 20s on Wednesday or the 30-year TIPS reopening on Thursday, rates could pull further off the highs and leave a relatively cleaner setup going into Powell’s speech,” they wrote.
A gauge of dollar strength slipped, while the Australian dollar led gains against the greenback among Group-of-10 currencies. The offshore yuan advanced after the People’s Bank of China once again maintained support for the currency.
Meanwhile, the surge in US yields has been the primary reason stocks have declined over the past several weeks, with investors “pushing out” the date of expected rate cuts as they begin to accept the Fed may keep rates “higher for longer,” according to Tom Essaye, founder of “The Sevens Report” newsletter.
“It’s not the height of rates that matters as much as how long they stay high,” Essaye noted. “If we see Powell hint at higher for longer on Friday, we will need to brace for more equity market volatility.”
Powell is set to speak Friday at the Kansas City Fed’s Jackson Hole Economic Policy Symposium. Investors will look to the highly anticipated speech for clues on the outlook for interest rates, which the Fed last month lifted to a range of 5.25% to 5.5%, the highest level in 22 years.
In commodities, both oil and gold edged higher.
Key events this week:
- 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 rose 0.3% as of 11:48 a.m. Tokyo time. The S&P 500 fell 0.3%
- Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.2%
- Japan’s Topix rose 0.2%
- Australia’s S&P/ASX 200 rose 0.7%
- Hong Kong’s Hang Seng was little changed
- The Shanghai Composite fell 0.7%
- Euro Stoxx 50 futures rose 0.1%
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0854
- The Japanese yen rose 0.1% to 145.70 per dollar
- The offshore yuan rose 0.1% to 7.2961 per dollar
- The Australian dollar rose 0.3% to $0.6444
- Bitcoin rose 0.7% to $26,037.96
- Ether rose 0.2% to $1,634.02
- The yield on 10-year Treasuries declined two basis points to 4.30%
- Japan’s 10-year yield was unchanged at 0.665%
- Australia’s 10-year yield declined four basis points to 4.23%
- West Texas Intermediate crude rose 0.2% to $79.79 a barrel
- Spot gold rose 0.2% to $1,901.15 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller.
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