(Bloomberg) -- Shares in Asia climbed for a second session as markets shifted focus to key US data prints this week for further insight into the health of the world’s biggest economy.
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A gauge of stocks for the region rose Monday, following on from Friday’s 1.5% gain as benchmarks in Australia, Taiwan and South Korea edged higher. Shares in Hong Kong fluctuated while those on the mainland were little changed. Japanese markets were closed for a holiday.
A semblance of calm returned after markets were ravaged early last week from fears the Federal Reserve is waiting too long to cut interest rates. The Cboe Volatility Index - Wall Street’s fear gauge - has reversed off its highest since the early days of the Covid-19 pandemic. The yen was slightly weaker against the greenback on Monday.
“The skies are not fully clear yet, but there are several reasons that suggest to us that some relatively calmer seas are ahead of us,” analysts at Nomura Holdings Inc. said in a note, citing a lessening of fears about a US recession and lower chances of a very hawkish Bank of Japan as among the grounds for optimism.
The yen surged last week as traders slashed bearish bets following the BOJ’s rate hike, forcing a negative feedback loop as investors dumped carry trades that ricocheted across markets, before ending last week little changed.
The BOJ and Fed are the biggest variables to drive trading, said Taosha Wang, a portfolio manager at Fil Asia Holdings Pte Ltd. For the US, “I don’t think the market has agreed — either a recession, which we think is excessive, or a soft landing,” she told Bloomberg Television’s Yvonne Man and David Ingles on Monday.
Elsewhere in Asia, traders will be focused on China’s retail sales and industrial production data this week to gauge whether the nation’s economy is finding traction.
China is still battling bond market speculators, with state banks selling debt to buoy yields. Sovereign yields rebounded last week after authorities intensified their fight against bond bulls. The economy needs more stimulus as the latest leading indicators point to a loss of recovery momentum around mid-year, according to Bloomberg Economics.
New Zealand’s central bank will also decide on policy this week, with the economy showing signs of entering its third recession in less than two years. Australian and New Zealand government bonds were little changed on Monday. Treasuries cash trading was shut in Asia due to the holiday in Tokyo.
Economic Downturn
A tumultuous week for global bond markets headed toward calm on Friday as angst over the potential US economic downturn — which spurred a Treasury rally and brief market meltdown — faded.
The US consumer price index on Wednesday is expected to have risen 0.2% from June for both the headline figure and the so-called core gauge that excludes food and energy. The modest moves, however, may not be enough to derail the Fed from a widely anticipated interest-rate cut next month.
At the weekend, Fed Governor Michelle Bowman said she still sees upside risks for inflation and continued strength in the labor market, signaling she may not be ready to support an interest-rate decrease when US central bankers next meet in September. Money markets have fully priced a rate cut in September and about 100 basis points of easing for the year, according to swaps data compiled by Bloomberg.
In commodities, oil edged higher on Monday following a 4.5% gain last week. Some of the top US oil refiners are throttling back operations at their facilities this quarter, adding to concerns that a global glut of crude is forming. Gold was lower.
Some key events this week:
RBA Deputy Governor Andrew Hauser speaks, Monday
India CPI, industrial production, Monday
Australia consumer confidence, Tuesday
Japan PPI, Tuesday
South Africa unemployment, Tuesday
UK jobless claims, unemployment, Tuesday
Home Depot earnings, Tuesday
US PPI, Tuesday
Atlanta Fed President Raphael Bostic speaks, Tuesday
Eurozone GDP, industrial production, Wednesday
New Zealand rate decision, Wednesday
South Korea jobless rate, Wednesday
Poland CPI, Wednesday
UK CPI, Wednesday
US CPI, Wednesday
Australia unemployment, Thursday
Japan GDP, industrial production, Thursday
Philippines rate decision, Thursday
China home prices, retail sales, industrial production, Thursday
Norway rate decision, Thursday
UK industrial production, GDP, Thursday
US initial jobless claims, retail sales, industrial production, Thursday
St. Louis Fed President Alberto Musalem, Philadelphia Fed President Patrick Harker speak, Thursday
Alibaba Group, Walmart earnings, Thursday
Hong Kong jobless rate, GDP, Friday
Taiwan GDP, Friday
US housing starts, University of Michigan consumer sentiment, Friday
Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 11:05 a.m. Tokyo time
Nikkei 225 futures (OSE) rose 0.7%
Australia’s S&P/ASX 200 rose 0.5%
Hong Kong’s Hang Seng fell 0.3%
The Shanghai Composite was little changed
Euro Stoxx 50 futures rose 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0920
The Japanese yen fell 0.2% to 146.96 per dollar
The offshore yuan was little changed at 7.1759 per dollar
The Australian dollar was little changed at $0.6584
Cryptocurrencies
Bitcoin fell 0.1% to $58,455.91
Ether fell 0.6% to $2,541.87
Bonds
Australia’s 10-year yield declined one basis point to 4.04%
Commodities
West Texas Intermediate crude rose 0.3% to $77.07 a barrel
Spot gold fell 0.3% to $2,424.86 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Richard Henderson.
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