Asian stocks advanced in lockstep with US equities as traders awaited a raft of economic figures over the next few days for clues on the outlook for global central bank policies.
(Bloomberg) — Asian stocks advanced in lockstep with US equities as traders awaited a raft of economic figures over the next few days for clues on the outlook for global central bank policies.
An Asian equity gauge was set for the highest close in two weeks, supported by gains across major indexes in the region. The Hang Seng Index advanced 1.6% as it extended its increase into a second day. China’s stocks outperformed, with the Hang Seng China Enterprises Index rising 1.8%. US futures steadied following the S&P 500’s first back-to-back advance in August.
Still, investors will continue to monitor for any signs of additional support measures from the Chinese government. Most of the gains in the nation’s stocks Monday — fueled by a raft of steps to support the market — dissipated by the end of the session, and foreign funds extended what was set to be a record outflow this month. China’s Finance Minister Liu Kun and Zheng Shanjie, chairman of the National Development and Reform Commission, pledged Monday to strengthen policy support and speed up government spending, according to the official Xinhua News Agency.
“If policy measures continue to be unveiled in the coming weeks, the market narrative may shift from ‘too little, too late’ to a more confident stance as policymakers regain credibility,” UBS Global Wealth Management strategists including Solita Marcelli and Mark Haefele wrote in a note.
Japan’s unemployment rate rose for the first time in four months in July, a slightly negative signal for the central bank and the government.
Strategists at Goldman Sachs Group Inc. expect the yen to depreciate to levels last seen more than 30 years ago if the Bank of Japan sticks to its dovish stance. Over the next six months, the currency is projected to reach 155 per dollar — the weakest since June 1990, according to strategists led by Kamakshya Trivedi. They had previously expected the yen to trade to 135.
The dollar weakened against most of its Group-of-10 counterparts. Treasury yields fell across tenors, with the two-year’s dropping five basis points to slightly below 5%. The auctions of two- and five-year Treasury notes Monday drew the highest yields since before the 2008 financial crisis, a reflection of the US bond-market selloff that deepened last week in anticipation of another Fed rate increase.
Government bonds rose in Australia and New Zealand Tuesday, in line with the moves in Treasuries.
August’s risk-off mood showed some signs of abating, but global equities are still poised for their worst month since September.
Employment growth in the US probably cooled and wage increases moderated in August, suggesting a further tempering of inflation risks that reduces the urgency for another Federal Reserve interest-rate hike. US’ core PCE deflator and euro-area inflation readings will also be in focus this week, while China’s PMI figures are expected to reinforce that the economy is going from bad to worse.
“This is going to be a critical week,” Jack McIntyre, a portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “We’re going to get some key data points that will kind of give us the chance to sort of reevaluate portfolio positions and the Fed’s going to reevaluate their monetary policy if they’re doing the right thing.”
In commodities, oil traded around $80 per barrel as traders waited for the next set of clues on the outlook for crude demand in the US and China. Gold edged higher.
Key events this week:
- US Conference Board consumer confidence, Tuesday
- Eurozone economic confidence, consumer confidence, Wednesday
- US GDP, wholesale inventories, pending home sales, Wednesday
- China manufacturing PMI, non-manufacturing PMI, Thursday
- Japan industrial production, retail sales, Thursday
- Eurozone CPI, unemployment, Thursday
- ECB publishes account of July monetary policy meeting, Thursday
- US personal spending and income, initial jobless claims, Thursday
- China Caixin manufacturing PMI, Friday
- Eurozone S&P Global Eurozone Manufacturing PMI, Friday
- South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
- Boston Fed President Susan Collins speaks at virtual event, Friday
- US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday
Some of the main moves in markets:
- S&P 500 futures were little changed as of 11:49 a.m. Tokyo time. The S&P 500 rose 0.6%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.7%
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 rose 0.4%
- Hong Kong’s Hang Seng rose 1.5%
- The Shanghai Composite rose 0.5%
- Euro Stoxx 50 futures rose 0.1%
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0833
- The Japanese yen rose 0.1% to 146.37 per dollar
- The offshore yuan was little changed at 7.2910 per dollar
- The Australian dollar rose 0.2% to $0.6442
- Bitcoin rose 0.4% to $26,081.28
- Ether rose 0.3% to $1,651.7
- The yield on 10-year Treasuries was little changed at 4.19%
- Japan’s 10-year yield declined 1.5 basis points to 0.645%
- Australia’s 10-year yield declined two basis points to 4.12%
- West Texas Intermediate crude was little changed
- Spot gold rose 0.1% to $1,922.78 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Anya Andrianova, Rita Nazareth and Abhishek Vishnoi.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.