(Bloomberg) — A global rebound in stocks looks set to support Asian bourses as trading gets underway Monday ahead of key reports on China’s economic activity and liquidity operations by the nation’s central bank.
Futures for Japan and Australia rose but Hong Kong’s were steady. S&P 500 and Nasdaq 100 contracts fluctuated after a global share index last week hit the highest level in over three months. The dollar was little changed early in Asia.
Equity markets have drawn succor from signs of slowing inflation, stirring hopes that the Federal Reserve can swivel to less aggressive monetary tightening to keep price pressures under control while averting a recession.
The picture is different in the bond market, where a still-steep inversion of the Treasury yield curve points to worries that the Fed will tip the US into an economic contraction in the campaign to quell inflation.
China’s data releases will likely show its recovery made a little more headway in July, according to Bloomberg Economics. Figures last week showed low interest rates are failing to spur lending, illustrating challenges from a struggling property sector and Covid-related mobility restrictions.
The People’s Bank of China may curb excess banking-system liquidity by withdrawing cash through its medium-term lending facility.
For global markets as a whole, the big question is how long the more than 12% rebound in global stocks from June bear market lows can last.
“We are 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, but 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 to avoid a policy mistake similar to the 1970s.
Investors are also keeping a wary eye on US-China tension after a US congressional delegation landed in Taiwan on Sunday for a two-day visit.
House Speaker Nancy Pelosi’s stopover in Taiwan drew a strong response from China, which conducted its most provocative military drills in decades in the wake of her visit.
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 seperate events, Thursday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 7:07 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
- Nikkei 225 futures climbed 0.7%
- Australia’s S&P/ASX 200 index futures added 0.6%
- Hang Seng Index futures were little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.2% Friday
- The euro was at $1.0258
- The Japanese yen was at 133.49 per dollar
- The offshore yuan was at 6.7380 per dollar
Bonds
Commodities
- West Texas Intermediate crude was at $91.83 a barrel, down 0.3%
- Gold was at $1,800.59 an ounce, down 0.1%
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