Asian equities rose following gains on Wall Street and after China stepped up support for its struggling property market.
(Bloomberg) — Asian equities rose following gains on Wall Street and after China stepped up support for its struggling property market.
Benchmark indexes climbed at the open in Japan, South Korea and Australia, while futures for Hong Kong equities also gained. US stock contracts were little changed after the S&P 500 Index closed up 0.2% Monday and the Nasdaq 100 edged higher.
The dollar was mixed against its Group-of-10 peers after dropping versus most of its counterparts Monday when Treasury yields declined. Government bond yields in Australia and New Zealand slipped in early trading. The yen halted a three-day rally.
A tailwind for investors in Asia may come from semiconductor companies after Taiwan Semiconductor Manufacturing Co. reported better-than-expected sales.
Investors are set to welcome news that two Chinese regulators stepped up pressure on financial institutions to ease terms for property companies by encouraging negotiations to extend outstanding loans. Many have been expecting for more concrete steps from Beijing to bolster its tepid economic recovery.
Troubles in China’s economy are having wide-ranging impacts on markets, with the chairman of mining giant Rio Tinto Group this week warning of knock-on effects to demand for industrial metals.
“There’s a difference between the short-term reopening thematic in China and the longer-term trajectory for growth,” Mary Manning, a fund manager at Alphinity Investment Management, said on Bloomberg Television. “Reopening is definitely happening, but it’s not going to be a V-shaped recovery like we saw in other countries. It’s going to be a lot slower than that.”
Inflation Challenge
The challenges in China come as many other countries, including the US, contend with a different issue — higher inflation and rising interest rates. In Monday’s session on Wall Street, traders sifted through remarks from a slew of Federal Reserve speakers while awaiting Wednesday’s consumer price index data that will help determine the path for rate hikes.
Fed officials Michael Barr, Mary Daly and Loretta Mester said the central bank will need to raise rates further this year to bring inflation back to its 2% goal.
Market momentum has slowed since equities notched a strong first-half rally as concern resurfaced about the impact of the many economic crosscurrents on corporate profits. Morgan Stanley’s Michael Wilson became the latest to warn that earnings forecasts will matter more than usual this time around given elevated equity valuations, higher interest rates and dwindling liquidity.
Tesla, Amazon
Tesla Inc. fell almost 2% and Amazon.com Inc. dropped before its Prime Day event. The Nasdaq 100, which notched a historic first half of a year amid the artificial-intelligence craze, will go through a “special rebalance.” A gauge of big banks pared gains on news about a plan to boost capital requirements.
The earnings season kicks off in earnest on Friday, when JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. report their numbers. There’s more pain on the way for the S&P 500 as profit warnings and fears of higher interest rates combine to threaten the key US stock indicator, according to the latest Markets Live Pulse survey.
Elsewhere, oil was little changed and gold steadied.
Key events this week:
- St. Louis Fed President James Bullard speaks, Tuesday
- Canada rate decision, Wednesday
- Bank of England Governor Andrew Bailey speaks, Wednesday
- US CPI, Wednesday
- Federal Reserve issues Beige Book, Wednesday
- Fed speakers include Neel Kashkari, Loretta Mester, Raphael Bostic, Wednesday
- China trade, Thursday
- Eurozone industrial production, Thursday
- US initial jobless claims, PPI, Thursday
- US University of Michigan consumer sentiment, Friday
- US banks kick off earnings, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:07 a.m. Tokyo time. The S&P 500 rose 0.2%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose less than 0.1%
- Japan’s Topix index rose 0.3%
- Australia’s S&P/ASX 200 Index rose 0.5%
- Hong Kong’s Hang Seng futures rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1003
- The Japanese yen was little changed at 141.39 per dollar
- The offshore yuan was little changed at 7.2308 per dollar
- The Australian dollar was unchanged at $0.6675
Cryptocurrencies
- Bitcoin fell 1.2% to $30,414.09
- Ether fell 0.8% to $1,878.04
Bonds
- The yield on 10-year Treasuries was unchanged at 3.99%
- Australia’s 10-year yield declined seven basis points to 4.22%
Commodities
- West Texas Intermediate crude rose 0.2% to $73.14 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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