Strength in Hong Kong-listed technology stocks helped prop up Asian shares on Tuesday, buoying sentiment after US stocks slid amid concern that the Federal Reserve will push the US into recession.
(Bloomberg) — Strength in Hong Kong-listed technology stocks helped prop up Asian shares on Tuesday, buoying sentiment after US stocks slid amid concern that the Federal Reserve will push the US into recession.
A gauge of the region’s equities rose, putting it on course for the first advance in seven days. Benchmark indexes in Hong Kong and mainland China ticked higher after Chinese Premier Li Qiang said in a forum that the government will roll out more practical, effective measures to boost demand and expects faster economic growth in the second quarter.
Japan and South Korean stocks remained lower. US equity futures gained slightly, shaking off weakness from Monday that saw the Nasdaq 100 fall 1.4% after suffering its worst week since March.
Australian dollar, which is sensitive to the growth outlook in China, rose 0.6%, leading gains versus the greenback among Group-of-10 currencies. US government bonds steadied Tuesday following unwinding of bets that the Federal Reserve will cut interest rates this year.
The yen continued to hover around 143.40 versus the dollar, a level that has caused concern for officials in Tokyo. The offshore yuan advanced after China set its daily reference rate for the managed currency at a stronger-than-expected level for a second day.
“Over the next one, three, five years, a lot of investors will make a lot of money out of Chinese equities,” Geoffrey Lunt, head of Asia investment specialist at HSBC Asset Management, said on Bloomberg Television. “But the timing is difficult partly because of the uncertainty around those stimulus announcements.”
Looking more broadly, investors have been growing more anxious that central banks determined to extinguish inflation will keep pushing rates higher and risk sending fragile economies into recession. That’s caused traders to finally relent on their bets that the Fed will cut rates this year after Chair Jerome Powell last week warned the US may need one or two more rate increases in 2023.
“I’m not sure we have felt the full effect of the whole inflation cycle,” Nancy Daoud, private wealth adviser at Ameriprise Financial Services, said on Bloomberg Television. “Those rate hikes are very, very likely in July and in early fall.”
In a late-night televised speech, Putin condemned leaders of the Wagner mercenary group as traitors to Russia. The comments did little to clarify the mystery around the weekend’s events or the fate of Wagner chief Yevgeny Prigozhin, who the Kremlin said had agreed to go to Belarus and avoid prosecution.
Meanwhile, a positive sign emerged in the US-China relationship from a report that US Treasury Secretary Janet Yellen plans to visit Beijing in early July for the first high-level economic talks with her new Chinese counterpart He Lifeng. Still, the Biden administration expects to have an executive order ready as soon as July that would regulate and potentially bar some US investments in China.
Oil edged higher on Tuesday after a choppy session following the armed uprising in Russia, a major OPEC+ producer. Gold also advanced.
Key events this week:
- US new home sales, durable goods, Conference Board consumer confidence, Tuesday
- US wholesale inventories, goods trade balance, Wednesday
- Fed to unveil results of annual banking industry stress test, Wednesday
- Policy panel with ECB’s Christine Lagarde, Fed Chair Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey speak, Wednesday
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Rafael Bostic speaks, Thursday
- China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
- US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 12:40 p.m. Tokyo time. The S&P 500 fell 0.45%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 1.4%
- Japan’s Topix fell 0.7%
- Australia’s S&P/ASX 200 rose 0.6%
- Hong Kong’s Hang Seng rose 1.5%
- The Shanghai Composite rose 0.9%
- Euro Stoxx 50 futures rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0928
- The Japanese yen was little changed at 143.38 per dollar
- The offshore yuan rose 0.4% to 7.2153 per dollar
- The Australian dollar rose 0.6% to $0.6718
Cryptocurrencies
- Bitcoin rose 0.9% to $30,437.38
- Ether rose 1.3% to $1,875.42
Bonds
- The yield on 10-year Treasuries was little changed at 3.73%
- Japan’s 10-year yield advanced 1.5 basis points to 0.365%
- Australia’s 10-year yield declined three basis points to 3.92%
Commodities
- West Texas Intermediate crude rose 0.6% to $69.78 a barrel
- Spot gold rose 0.3% to $1,929.35 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott and Abhishek Vishnoi.
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