(Bloomberg) — Asian stocks traded within tight ranges, as traders awaited US inflation data due this week for clues on the size of the Federal Reserve’s coming interest-rate cut.
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A key Asian equity index was little changed, while shares in Hong Kong, mainland China and Korea notched modest declines. Tokyo and Sydney rose following a positive session in US equities that was fueled by renewed dip-buying. Benchmark Treasuries yields were little changed while the dollar advanced.
The fluctuations in the market reflect investors’ caution as they look to balance US recession fears and the likelihood of a soft landing. Political uncertainties playing out in the backdrop will be on display when former President Donald Trump squares off in a debate with US Vice President Kamala Harris later Tuesday.
“Markets are questioning whether the Fed can still go for a jumbo rate cut next week, and that is helping the US dollar to claw back some gains,” said Charu Chanana, head of FX strategy at Saxo Markets in Singapore. “This week, focus also moves away from the economic trajectory towards US elections and that is likely aiding the US dollar as well.”
In China, the CSI 300 Index is approaching its lowest close since January 2019 on deepening concerns about the country’s economic weakness, adding further pressure on policymakers to introduce additional support measures. Traders are also awaiting China’s trade figures a day after data showed deflationary pressures in the world’s second-largest economy are spiraling.
Shares of some Chinese biotech companies such as Wuxi AppTec are down after the US House overcame a last-ditch lobbying effort and passed a bill that would blacklist some firms deemed foreign adversaries.
Alibaba shares rose as much as 5.2% Hong Kong — the most since Aug. 16, with some 111.2 million shares traded — after joining the Stock Connect program that gives mainland investors easier access to investing in the Chinese tech giant.
Iron ore also will be closely watched on Tuesday, as it sank below $90 a ton in the previous session for the first time since 2022 before closing 1.1% higher. Industrial commodities are facing sustained pressure from tepid Chinese demand and gathering worries over global growth.
On Wednesday, a US government report is expected to show the consumer price index rose 2.6% in August from a year earlier, according to the median forecast of economists surveyed by Bloomberg. That would be the smallest increase since 2021. There will be little new guidance from Fed officials, who are in the traditional blackout period ahead of the Sept. 17-18 meeting.
“Inflation matters,” said Chris Low at FHN Financial. “Weaker numbers might encourage the Fed toward a 50 basis-point cut, while anything higher could lock in 25 basis points.”
Australian bond yields drifted lower early Tuesday.
Global equities were net sold for the eighth straight week led by North America, according to Goldman Sachs Group Inc.’s prime brokerage desk report for the week ended Sept. 6. The move is a continuation of a trend that, broadly speaking, started in May as funds began a big unwind of their positions in order to get more cash readily on hand for possible dislocations around the US presidential election.
“Slowdowns do not necessarily portend recessions, nor are stock market corrections necessarily the harbinger of bear markets,” said Konstantinos Venetis at TS Lombard. “But the mix of rising macro (growth) and political (US election) uncertainty increasingly puts the burden of proof on the bulls in the near term.”
The S&P 500 rose 1.2% after its worst start to the month on record, according to Bespoke Investment Group data going back to 1953. Nvidia Corp. and Tesla Inc. led gains in megacaps.
Oil held a one-day gain as a risk-on tone returned to wider markets. Gold held a small advance with markets looking ahead to the US inflation data. Bitcoin fell below $57,000.
Key events this week:
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China trade, Tuesday
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Germany CPI, Tuesday
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US presidential debate between Donald Trump and Kamala Harris, Tuesday
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US CPI, Wednesday
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Japan PPI, Thursday
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ECB rate decision, Thursday
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US initial jobless claims, PPI, Thursday
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Eurozone industrial production, Friday
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Japan industrial production, Friday
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U. Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were unchanged as of 11:46 a.m. Tokyo time
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Nasdaq 100 futures fell 0.1%
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Japan’s Topix rose 0.3%
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Australia’s S&P/ASX 200 rose 0.6%
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Hong Kong’s Hang Seng rose 0.3%
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The Shanghai Composite fell 0.2%
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Euro Stoxx 50 futures rose 0.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was unchanged at $1.1035
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The Japanese yen fell 0.1% to 143.33 per dollar
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The offshore yuan was little changed at 7.1267 per dollar
Cryptocurrencies
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Bitcoin fell 0.3% to $56,833.76
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Ether rose 0.2% to $2,346.63
Bonds
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The yield on 10-year Treasuries was little changed at 3.71%
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Japan’s 10-year yield was little changed at 0.885%
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Australia’s 10-year yield declined four basis points to 3.91%
Commodities
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West Texas Intermediate crude was little changed
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Spot gold fell 0.1% to $2,503.11 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott.
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