Asia weighs heavily, hopes for benign US inflation By Reuters

By Wayne Cole

SYDNEY (Reuters) – Equity markets were broadly firmer in Asia on Monday as a holiday in Japan removed a source of recent volatility and investors looked to key economic data from the U.S. and China for an update on the outlook of global growth.

Key for the Federal Reserve will be US consumer prices on Wednesday, where economists are looking for 0.2% increases in both headline and core, with the annual core slowing to 3.2%.

“This would likely boost the Fed’s confidence that disinflation is underway, allowing for a rate cut in September, but a base rate still above target should also militate against a cut of more than 50 basis points base or a cut at the meeting,” analysts at Barclays said. in a note.

“Furthermore, we expect a robust 0.8% YoY growth in core retail sales, indicating continued resilience in the engine of the economy, the consumer, on the back of strong earnings and sound fundamentals.”

In addition to July retail sales, there is data on industrial production and housing starts, along with several surveys of regional manufacturing and consumer sentiment.

The futures market currently implies a 49% chance that the Fed will cut by 50 basis points in September, although that is down from 100% a week ago, when Japanese stocks went into freefall.

Futures traded at 35,570, compared to a cash close of 35,025, although they’re not quite back to where they were before last week’s crash.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, led by a 1.5 percent gain in Taiwan. Chinese blue chips held steady.

EUROSTOXX 50 futures rose 0.5% and 0.4%. and Nasdaq futures added 0.1 percent in thin trading. So far, around 91% of them have reported wins, and 78% of them beat The Street.

The results from Walmart (NYSE: ) and Home Depot (NYSE: ) this week will also provide a snapshot of how American consumers are holding up.

China releases retail sales and industrial production figures on Thursday, which are expected to show the economy continues to underperform, underscoring the need for more stimulus.

In foreign markets, the dollar rose 0.3 percent to 147.08 yen, and off last week’s deep low of 141.68, while the euro was flat at $1.0919.

BofA FX strategist Shusuke Yamada believes the rush to unlock yen trades – borrowing at low rates to buy higher-yielding assets – has largely run its course, with speculative yen short positions down 60%.

“Longer-term structural outflows from corporate foreign direct investment and international retail equity holdings should drive yen weakness,” he adds, and sees the dollar at ¥155.00 by the end of the year.

Data from the IMM bourse showed net short positions in dollar/yen fell to 11,354, compared with 184,000 in early July.

In commodity markets, gold held steady at $2,424 an ounce after falling slightly last week. (EMPTY/)

Oil prices rallied after rising 3.5 percent last week as fears of a widening conflict in the Middle East threatened supplies. (OR)

Israeli Defense Minister Yoav Gallant spoke to US Defense Secretary Lloyd Austin on Sunday and told him that Iran’s military preparations suggest Iran is preparing for a full-scale attack on Israel.

The Pentagon also made the rare decision to publicly report that Austin had ordered the deployment of a nuclear-powered guided missile submarine to the Middle East.

gained 22 cents to $79.88 a barrel, while rose 38 cents to $77.22 a barrel.