Asian Stocks Rebound After Upbeat US Economic Data: Markets Wrap
(Bloomberg) -- Asian stocks advanced as upbeat US growth data suggested the Federal Reserve is engineering a so-called soft landing for the economy.
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Equities in Australia and South Korea rose while those in Japan inched up. The MSCI Asia Pacific Index headed for a fourth month of gains as traders awaited a key US inflation report due Friday. Japan’s 10-year bond futures opened lower after data showed inflation in Tokyo quickened in August, backing the case for a further normalization of monetary policy.
Chinese equities may be in focus after the yuan strengthened Thursday and the Nasdaq Golden Dragon Index climbed 2.6%. The S&P 500 closed little changed overnight, weighed down by Nvidia Corp. after its underwhelming earnings, while the Dow Jones Industrial Average ended at an all-time high.
A rally Friday will cap the best month for US and global stocks since June amid bets the Fed will ease policy as it tames inflation without the economy tumbling into recession. US output grew at a slightly stronger pace in the second quarter than initially reported, reflecting an upward revision to consumer spending that more than offset weaker activity in other categories.
“It looks to me like a healthy economy where the Fed can start cutting rates not because of recession risk, but because of disinflation,” Ron Temple, chief market strategist at Lazard Asset Management, said on Bloomberg TV. “We’re decelerating from a very strong economy to a strong economy and I don’t see evidence of recession risk going up materially.”
While the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, is due later in the day, the currency market is turning its focus to next week’s US employment data to confirm whether the Fed will cut rates in September.
The Bloomberg Dollar Spot Index was little changed early on Friday, though gains earlier this week mean it is set to end up for the first week in five.
Australian bonds edged lower, tracking US Treasuries which held losses after a $44 billion sale of seven-year notes was a bit soft. The yield on 10-year bonds advanced three basis points to 3.86%, leaving the spread between two-year notes — a closely watched gauge - just shy of regaining a normal, positive slope. Swap traders slightly trimmed bets on Fed easing, while still expecting around 100 basis points of cuts for 2024.
In commodities, oil was steady after jumping Thursday on positive US economic data and worsening supply disruptions in Libya. Meanwhile, gold slipped.
Key events this week:
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
Eurozone CPI, unemployment, Friday
US personal income, spending, PCE; consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:09 a.m. Tokyo time
Hang Seng futures rose 0.1%
Japan’s Topix rose 0.2%
Australia’s S&P/ASX 200 rose 0.5%
Euro Stoxx 50 futures rose 0.9%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1080
The Japanese yen rose 0.1% to 144.80 per dollar
The offshore yuan was little changed at 7.0902 per dollar
Cryptocurrencies
Bitcoin fell 0.4% to $59,291.77
Ether fell 0.6% to $2,524.99
Bonds
The yield on 10-year Treasuries was unchanged at 3.86%
Australia’s 10-year yield advanced two basis points to 3.97%
Commodities
West Texas Intermediate crude fell 0.2% to $75.73 a barrel
Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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