Bloomberg — A global rebound in stocks supported Asian bourses Monday as investors awaited key economic activity data and liquidity operations in China.
Shares climbed in Australia and Japan -- where the Nikkei 225 gauge was on track to erase its year-to-date loss -- while US futures edged lower after the S&P 500 index last week hit the highest level in over three months.
Equity markets have drawn succor from signs of slowing inflation, which stirred hopes of a Federal Reserve shift to less aggressive monetary tightening that can contain price pressures without triggering a recession.
The picture is different in the bond market, where a still-steep inversion of the Treasury yield curve points to worries the Fed will tip the US into an economic contraction. Treasury yields drifted higher and the dollar was steady.
China’s data releases will likely show its recovery made a little more headway in July, according to Bloomberg Economics. But the world’s second-largest economy still faces property-sector woes, Covid curbs and a global slowdown.
Those challenges are weighing on lending despite low-interest rates. The People’s Bank of China may curb excess banking-system liquidity by withdrawing cash through its medium-term lending facility.
A key question in markets is how much longer a 12% rebound in global stocks from June lows can last. The bounce reduced this year’s losses to about 13%.
“We’re definitely heading in a better direction,” Kristina Hooper, Invesco chief global market strategist, said on Bloomberg Television. “It looks like we are passed peak for inflation. The problem is inflation is still very, very high.”
Federal Reserve Bank of Richmond President Thomas Barkin said Friday the central bank needs to keep raising interest rates until it’s clear inflation is running at its 2% target even if the economy weakens.
Investors are also keeping a wary eye on US-China tension. A US congressional delegation landed in Taiwan on Sunday for a two-day visit. House Speaker Nancy Pelosi’s stopover on the island, which China regards as part of its territory, led Beijing to conduct some of its most provocative military drills.
Meanwhile, five of China’s largest state-owned companies on Friday announced plans to delist from US exchanges. The two countries are in a dispute about allowing American regulators to inspect audits of Chinese businesses.
Elsewhere, oil extended losses as traders weighed prospects for more Iranian supply and the outlook for demand. Gold retreated below $1,800 an ounce and Bitcoin hovered around $24,000.
Here are some key events to watch this week:
- Earnings include Walmart, Target, Home Depot, Tencent
- China data including retail sales, industrial production, Monday
- Hedge funds’ 13F filings, Monday
- Federal Reserve July minutes, Wednesday
- New Zealand rate decision, Wednesday
- UK CPI, US retail sales, Wednesday
- Australia unemployment, Thursday
- U.S. existing home sales, initial jobless claims, Conference Board leading index, Thursday
- Fed’s Esther George, Neel Kashkari speak at separate events, Thursday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 9:15 a.m. in Tokyo. The S&P 500 rose 1.7% Friday
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 2.1% Friday
- Japan’s Topix index added 0.4%
- Australia’s S&P/ASX 200 index rose 0.5%
- Hang Seng Index futures were little changed earlier
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.0259
- The Japanese yen was at 133.27 per dollar, up 0.1%
- The offshore yuan was at 6.7390 per dollar
Bonds
- The yield on 10-year Treasuries rose one basis point to 2.84%
- Australia’s 10-year yield fell four basis points to 3.39%
Commodities
- West Texas Intermediate crude was at $91.80 a barrel, down 0.3%
- Gold was at $1,799.18 an ounce, down 0.2%
Read more at Bloomberg.com