Asian stocks look set for a mixed opening, after Wall Street rose ahead of key US data that’s expected to show how close the Federal Reserve is from ending its rate hikes.
Futures in Japan pointed to gains, while Australian shares are poised to open flat and Hong Kong may dip. In the US, tech stocks led the way forward with the Nasdaq 100 rising 1.2%. Tesla Inc. rallied 10% as Morgan Stanley said its Dojo supercomputer may boost value by up to $500 billion. Qualcomm Inc. climbed after Apple Inc. extended a deal with the chipmaker.
In currencies, the greenback fell by the most in two months as Asia’s biggest central banks took aim in different ways at its recent rally. Bitcoin dropped to the lowest since June, as the world’s largest digital token formed a so-called death cross pattern — in which the 50-day moving average falls below its 200-day marker. Such a crossover typically signals a loss of short-term momentum and further selling pressure ahead.
Focus in Asia remains on hopes for China’s recovery, amid fresh signs on Monday that Asia’s biggest economy may finally be starting to improve. Deflationary pressures eased and the yuan rallied, while strong credit data showed recent steps to bolster the real estate market may be starting to lift household demand for mortgages.
Meanwhile, after Bank of Japan Governor Kazuo Ueda aired the possibility of ending the developed world’s last key negative interest rate, the yen advanced the most in two months against the dollar. The nation is due to release key producer price index data on Wednesday.
In the US, consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York survey. The consumer-price index report Wednesday will provide the latest insight into how much further the Fed may need to go to pull inflation back toward its target.
“This week is more likely to be a ‘good news is good, bad news is bad’ story,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. “The market’s ability to rebound in the near term could hinge on this week’s inflation numbers, especially Wednesday’s CPI.”
The market is in a late-cycle backdrop — a time when the Fed is expected to pause or reverse its hawkish policy stance — and more conservative equity factors, like high cash and low debt, have started to outperform, according to Morgan Stanley strategist Michael Wilson. He reiterated his view that stock markets are not yet reflecting the risk of a recession.
“Bullishness is relatively high while the Fed remains shy of its inflation target,” John Stoltzfus, chief investment strategist at Oppenheimer & Co., wrote. He said investors should curb their enthusiasm for a long rate pause or even a rate cut and instead “right-size expectations.”
Some 26% of respondents in the latest MLIV Pulse survey say they plan to decrease their exposure to the US equity benchmark over the next month. That’s double the amount of those who plan to buy. Only 13% of respondents said they might expand their exposure.
Read: ‘Hold-Your-Breath Moment’ Puts Wall Street on Edge: Surveillance
Oil steadied near its highs of the year after rallying about 10% in recent weeks, with technical indicators that suggest its gains may be overdone sapping the benefit of risk-on sentiment in broader markets. Energy-market watchers will also be keeping a close eye on Australia, after Chevron Corp. said it’s applying to a labor regulator to help resolve its dispute with unions at liquefied natural gas sites as workers continue partial strikes.
Key events this week:
- Germany ZEW survey expectations, Tuesday
- UK jobless claims, unemployment, Tuesday
- Apple set to unveil iPhone 15 line and next-generation smartwatches at “Wonderlust,” its biggest product-upgrade event of the year, Tuesday
- Japan PPI, Wednesday
- Eurozone industrial production, Wednesday
- UK industrial production, Wednesday
- US CPI, Wednesday
- Tech leaders including Tesla’s Elon Musk and Meta Platforms’ Mark Zuckerberg are set to attend a forum on the future of AI convened by Senator Chuck Schumer, Wednesday
- Japan industrial production, Thursday
- European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
- US retail sales, PPI, business inventories, initial jobless claims, Thursday
- China property prices, retail sales, industrial production, Friday
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 8:04 a.m. Tokyo time. The S&P 500 rose 0.7%
- Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 1.2%
- Nikkei 225 futures rose 0.5%
- Hang Seng futures fell 0.3%
- S&P/ASX 200 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0751
- The Japanese yen was little changed at 146.52 per dollar
- The offshore yuan was little changed at 7.3019 per dollar
- The Australian dollar was little changed at $0.6430
Cryptocurrencies
- Bitcoin rose 0.2% to $25,142.36
- Ether rose 0.5% to $1,548.9
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.29%
- Australia’s 10-year yield was little changed at 4.16%
Commodities
- West Texas Intermediate crude was unchanged at $87.29 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
