Shares in Asia opened higher Tuesday following bullish trade on Wall Street as investors parsed further signs of stability in the global economy.
(Bloomberg) — Shares in Asia opened higher Tuesday following bullish trade on Wall Street as investors parsed further signs of stability in the global economy.
Equities in Australia and Japan rose in morning trade. Futures contracts for Hong Kong shares also advanced, while those for US stocks were flat after the S&P 500 and Nasdaq 100 drifted higher on Monday to extend a run of monthly gains for the two benchmarks.
In the region, the Reserve Bank of Australia will deliver its latest interest rate decision later today. Financial markets are betting the RBA will keep its cash rate unchanged, while economists see a 25 basis-point hike to 4.35%. Australian bond yields edged lower.
Investors are also focused on China, where stocks ended July on an optimistic note. This comes after Beijing’s top economic planning agency released a wide-ranging policy document containing some recently announced consumption-related initiatives, while a separate report said big cities such as the capital and Shenzhen may ease curbs on the property sector.
China’s Caixin PMI data is also due later today, which may shed further light on the health of the world’s second largest economy.
The yen was steady against the dollar after declining Monday as the Bank of Japan announced an unscheduled bond-purchase operation to tamp down rates.
The euro-area economy returned to growth while underlying inflation pressures persisted — supporting early arguments for the European Central Bank to raise interest rates again.
In the US, data pointing to inflation becoming tamed boosted optimism the world’s biggest economy will have a soft landing as the Federal Reserve nears the end of its monetary-tightening cycle.
The S&P 500 edged higher to around 4,590 Monday, closing at a 16-month high. The megacap space saw subdued action, with Apple Inc. and Amazon.com Inc. due to report earnings in the coming days. The Nasdaq 100 notched its longest streak of monthly gains since August 2020. Treasury 10-year yields traded near 3.95% while the dollar posted a small gain.
The buoyant mood on Wall Street has seen a retreat among bearish institutional investors, economists and strategists as market returns and economic data continue to challenge expectations, said Mark Hackett at Nationwide.
Citigroup Inc.’s Scott Chronert has joined the list of strategists who have revisited their gloomy outlooks in recent weeks, raising his forecast for the S&P 500. Morgan Stanley’s Michael Wilson, who has been among the market’s leading pessimists throughout 2023, changed his tone and now sees the rally running further.
“The challenges companies have endured – stubborn inflation, weak markets, and sluggishness internationally – are no longer headwinds,” Hackett noted. “Now, we’re not only seeing tailwinds heading into 2024, but we’re getting less disruptive reactions in the stock market following earnings reports.”
In corporate news, Exxon Mobil Corp. climbed as Bloomberg News reported it’s in talks with Tesla Inc., Ford Motor Co. and other automakers about supplying them with lithium. SoFi Technologies Inc. surged 20% as the online bank raised its revenue guidance. Yellow Corp., which hauls about 15% of major companies’ so-called less-than-truckload shipments, soared after ceasing operations and telling union leaders that it plans to file for bankruptcy.
Fed Survey
Traders took a Federal Reserve survey of lending officers in stride. As hinted by Chair Jerome Powell, the central bank said financial institutions reported tighter standards and continued weak demand for loans in the second quarter, extending a trend that began before recent stresses in the banking sector emerged.
Meantime, Fed Bank of Chicago President Austan Goolsbee said data showing slower inflation is “fabulous news,” but he hasn’t yet decided on whether to support pausing rate hikes at the next policy meeting. Over the weekend, his Minneapolis counterpart Neel Kashkari said the inflation outlook is “quite positive,” though the central bank’s aggressive tightening will likely result in some job losses and slower growth.
Elsewhere, oil edged down after surging 16% in July, its biggest monthly advance since early 2022.
Key events this week:
- Reserve Bank of Australia policy decision, Tuesday
- Eurozone S&P Global Eurozone Manufacturing PMI, unemployment, Tuesday
- US construction spending, ISM Manufacturing, job openings, light vehicle sales, Tuesday
- China Caixin Services PMI, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
- Bank of England rate decision, Thursday
- US initial jobless claims, productivity, factory orders, ISM Services, Thursday
- Eurozone retail sales, Friday
- US unemployment rate, non-farm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:32 a.m. Tokyo time. The S&P 500 rose 0.2%
- Nasdaq 100 futures were little changed. The Nasdaq 100 was little changed.
- Hang Seng futures rose 0.7%
- Japan’s Topix rose 0.2%
- Australia’s S&P/ASX 200 rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0994
- The Japanese yen was little changed at 142.37 per dollar
- The offshore yuan was little changed at 7.1520 per dollar
- The Australian dollar was little changed at $0.6718
Cryptocurrencies
- Bitcoin rose 0.1% to $29,241.37
- Ether rose 0.3% to $1,858.71
Bonds
- The yield on 10-year Treasuries was little changed at 3.96%
- Japan’s 10-year yield was unchanged at 0.595%
- Australia’s 10-year yield declined three basis points to 4.03%
Commodities
- West Texas Intermediate crude fell 0.2% to $81.65 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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