Futures Show Mixed Open for Asia Before China Data: Markets Wrap

Asian share markets were poised for another cautious open on Tuesday ahead of key economic data from China and after stocks on Wall Street eked out small gains late in the session.

(Bloomberg) — Asian share markets were poised for another cautious open on Tuesday ahead of key economic data from China and after stocks on Wall Street eked out small gains late in the session.

Futures pointed to a small advance for Japanese equities while Hong Kong and Australia looked set for slight declines. The possibility of further Federal Reserve policy tightening lifted Treasury yields and constrained US stocks, with the S&P 500 erasing losses in afternoon trading and the tech-heavy Nasdaq 100 underperforming major equity benchmarks.

Two-year Treasury yields climbed to around 4.2%. Richmond Fed President Thomas Barkin said he wants to see more evidence that US inflation is easing back to the central bank’s goal of 2%. New York state manufacturing activity unexpectedly expanded in April for the first time in five months as new orders and shipments snapped back.

Much of the focus in Asia will be on China and the strength of its economic recovery. Figures on Tuesday are projected to show gross domestic product expanded 4% in the first quarter from a year earlier, well below the government’s target for full-year growth of around 5%. March data may show increases in industrial output, investment and retail sales.

Elsewhere, minutes from the Reserve Bank of Australia’s policy meeting earlier this month will be parsed for signs that rates may be lifted again after a pause, while Indonesia’s central bank is expected to keep its benchmark unchanged.

Banking Woes

US bank earnings on Monday didn’t relieve much investor nervousness that the sector can quickly bounce from turmoil that roiled several lenders earlier this year, as a so-called earnings recession in the world’s biggest economy looms.

Charles Schwab Corp. rose as executives said the firm can weather the turmoil roiling US banks, while pausing stock buybacks in response to the industry’s worst crisis since 2008. State Street Corp. fell as it reported clients retreated from its investment products.

“The current season’s earnings profile is rather opaque,” said Peter Kinsella, head of FX strategy at Swiss asset manager UBP. “The banks last week did better than expected, but we have to see what the reporting season will be like from everyone else. But the S&P is expensive at current levels so you have to ask yourself if there is really much material upside from here.”

New Zealand’s government bond yields rose in the slipstream of Treasury rates early Tuesday. The dollar was little changed versus its major counterparts after rising for a second day on Monday.