Asia has a bigger advantage with Jackson Hole in the spotlight: Markets Wrap

(Bloomberg) — Asian stocks were broadly firmer on Monday, ahead of key central bank decisions in the region this week and the annual meeting in Jackson Hole.

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A gauge of shares in the region rose, extending Friday’s gains. Share markets in Japan fluctuated, while those in Australia fell. U.S. futures rose in early Asian trade after the S&P 500 rose 0.2 percent on Friday. The dollar was little changed, while Treasury yields rose.

The calm start to the week comes ahead of US jobless claims and economic activity data, while Jerome Powell is expected to confirm that Federal Reserve interest rate cuts are on the cards when he speaks in Wyoming. The meeting caps a volatile period for global stocks, driven in part by concerns that the Fed will not cut borrowing costs quickly enough to prevent a deeper US slowdown.

“Financial markets will be sensitive to his every word,” Commonwealth Bank of Australia strategists Joseph Capurso wrote in a note. “We expect Powell to give the green light to a cut on September 19, but we expect Powell to retain the option for delayed cuts or larger cuts, subject to the next CPI and wages.”

Goldman Sachs over the weekend cut the likelihood of a US recession next year to 20% from 25%, citing last week’s retail sales and jobless claims data. If the August jobs report, due on Sept. 6, “looks reasonably good, we would probably cut our probability of a recession back to 15 percent,” Goldman economists led by Jan Hatzius wrote in a report addressed to customers on Saturday.

In Asia this week, investors will watch central bank meetings in Indonesia and South Korea for signs of policy easing, while Thailand’s decision will be crucial following reports that the nation’s new prime minister could abandon a key package of stimulation.

Bank of Japan Governor Kazuo Ueda is scheduled to attend a special session of Japan’s parliament this week to likely discuss the July 31 rate hike that has roiled global markets. Meanwhile, hedge funds turned bullish on Japan’s currency for the first time since 2021, marking a sharp shift from the highly negative sentiment seen among these traders in early July.

In China, authorities are expected to keep key 1- and 5-year lending rates on hold after the People’s Bank of China last week promised further measures to support the economic recovery, while warning it would not adopt “drastic” measures .

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In commodities, oil fell for the fourth time in five sessions as traders eyed US-led efforts to secure a 10-month Middle East ceasefire as the Russia-Ukraine war escalates. Gold topped $2,500 on hopes the Fed is moving closer to cutting interest rates. Elsewhere, iron ore had its worst week since early June amid concerns that a steel industry crisis spreading in China will dampen demand, while supply from miners remains robust.

“How markets trade equities in another ‘quiet’ week for data, filled with more central bank decisions and guidance, will be important in setting the tone for a more hectic end to the month,” said Bob Savage , Head of Strategy and Markets Outlook. at BNY. “Furthermore, expect next week to be dominated by the unknowns of politics and geopolitics.”

Here’s what follows:

• The US Democratic National Convention takes place on Monday, August 22

• The start of the annual US-South Korea military exercise on Monday

• Prime lending rates in China, Canada and Eurozone CPI on Tuesday

• Sweden and Turkey interest rate decisions on Tuesday

• Indonesia and Thailand interest rate decisions on Wednesday

• FOMC Minutes of July 30-31 Policy Meeting, BLS Preliminary Annual Revision of Payrolls, Wednesday

• European Central Bank Governing Council member Fabio Panetta speaks in Rimini on Wednesday

• South Korea’s central bank’s rate decision on Thursday

• US Vice President Kamala Harris delivers an acceptance speech on the final night of the Democratic National Convention on Thursday

• The central bank of Mexico, the National Bank of Poland issues minutes of monetary policy

• Malaysia’s CPI data, while Mexico and Norway release GDP data

• Japan’s CPI data is due and Bank of Japan Governor Kazuo Ueda will attend a special session of the Japanese parliament on Friday to discuss a July 31 rate hike

• Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey speak at the Fed’s annual Jackson Hole Symposium in Kansas City on Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were up 0.2% as of 9:34 a.m. Tokyo time

• Hang Seng futures rose 0.9%

• Nikkei 225 (OSE) futures were little changed

• The Japanese Topix has been changed a bit

• Australia’s S&P/ASX 200 was little changed

• Euro Stoxx 50 futures rose 0.2%

Coins

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1026

• The Japanese yen fell 0.2 percent to 147.93 per dollar

• The offshore yuan was little changed at 7.1634 per dollar

• The Australian dollar rose 0.2% to $0.6684

Cryptocurrencies

• Bitcoin fell 2.3% to $58,437.63

• Ether fell 1.9% to $2,615.24

BONDS

• The 10-year Treasury yield rose two basis points to 3.90%

• Japan’s 10-year yield rose two basis points to 0.890%

• Australia’s 10-year yield rose two basis points to 3.95%

commodities

• West Texas Intermediate crude fell 0.1% to $76.56 a barrel

• Spot gold was down 0.2% at $2,501.96 an ounce

This story was produced with the help of Bloomberg Automation.

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