Asian shares advance as yen steadies after decline: Markets are over

(Bloomberg) — Asian shares advanced on Tuesday, led by Japanese stocks, while the yen steadied after weakening against the dollar in the past week.

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Japanese and Korean shares rose, while those in Sydney fell. Chinese benchmarks fluctuated in open trade. S&P 500 futures slipped ahead of Wall Street’s reopening later Tuesday after the Labor Day public holiday.

The yen was little changed against the greenback after falling for four straight sessions.

The Japanese currency will remain weak for “a long time to come” given the differences in interest rates between the US and Japan, according to Mark Matthews, head of Asia research at Julius Baer.

“Our assumption is that the Bank of Japan policy rate will be half a percent by March next year and the federal funds rate will be 4.5 percent — that’s another 400 basis points of difference, which is very big,” Matthews said in an interview on Bloomberg Television. “On that basis, we see the yen weakening.”

The South Korean won was slightly weaker after August inflation data showed year-on-year prices rose at the slowest pace since 2021.

Traders in Asia will be watching closely for new signs of China’s economic woes. Data on Saturday showed that Chinese factory activity contracted for a fourth straight month in August, the latest sign that the world’s second-largest economy may struggle to meet its growth target for this year.

China’s slowdown has highlighted the urgency for new government stimulus as stocks of key commodities from steel to soybeans pile up in the nation’s warehouses – evidence that economic activity remains too weak to eliminate surpluses.

While global traders will approach this month with caution as data shows September has been a weak month for stocks in recent years, Friday’s upcoming US jobs report could be a factor in whether history it repeats itself. It will provide crucial information on how quickly or slowly the Federal Reserve could cut rates as the US election campaign gets into full swing.

Traders are pricing in the start of the U.S. easing cycle this month with about a one-in-four chance of a 50-basis-point cut, according to data compiled by Bloomberg. The stock market rally could stall even if the Fed initiates a rate cut, JPMorgan Chase & Co. strategists warned, as any policy easing would be in response to slowing growth, while the seasonal trend for September would be a another impediment, the team led by Mislav Matejka wrote in a note.

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“We’re not out of the woods yet,” Matejka said, reiterating his preference for defensive sectors amid falling bond yields. “Sentiment and positioning indicators look far from attractive, political and geopolitical uncertainty is high, and seasonals are more challenging.”

Jobs data that could point to a very gradual cooling of the US labor market could prompt traders to adjust their expectations for rate cuts in favor of the dollar, according to Valentin Marinov, head of G-10 FX strategy at Credit Agricole CIB.

“Markets may be leaning too much ahead of the September Fed meeting,” Marinov said on Bloomberg Television. “The dollar could recover once markets realize the Fed will move more cautiously.”

In commodities, oil rose after Libya declared force majeure in a key oil field amid mounting shutdowns that wiped nearly a million barrels of daily global supplies.

Elsewhere, the US is laying the groundwork for new sanctions against Venezuelan government officials in response to Nicolás Maduro’s disputed re-election in July. The country ordered the arrest of presidential candidate Edmundo González, an escalation of the government’s crackdown on dissent following the vote.

Key events this week:

• Swiss GDP, CPI, Tuesday

• US construction spending, ISM Manufacturing index, Tuesday

• Australia’s GDP on Wednesday

• China Caixin services PMI on Wednesday

• Eurozone HCOB services PMI, PPI, Wednesday

• The Fed’s Beige Book on Wednesday

• Eurozone retail sales on Thursday

• Factory orders from Germany on Thursday

• US Initial Jobless Claims, ADP Employment, ISM Services Index, Thursday

• Eurozone GDP, Friday

• US non-farm payrolls on Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were little changed as of 10:37 a.m. Tokyo time

• Japan’s Topix rose 0.8%

• Australia’s S&P/ASX 200 fell 0.1%

• Hong Kong’s Hang Seng fell 0.3%

• The Shanghai Composite was little changed

• Euro Stoxx 50 futures were little changed

Coins

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1064

• The Japanese yen was little changed at 146.96 per dollar

• The offshore yuan was little changed at 7.1195 per dollar

Cryptocurrencies

• Bitcoin rose 0.4% to $59,225.01

• Ether was down 1% at $2,529.42

BONDS

commodities

• West Texas Intermediate crude rose 0.5% to $73.90 a barrel

• Spot gold was down 0.3% at $2,491.69 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Jason Scott.

(An earlier version corrected the date when the Chinese factory data appeared.)

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