(Bloomberg) — Asian stocks rose broadly on Monday ahead of key decisions by Asia’s central banks this week and their annual meetings in Jackson Hole.
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A gauge of regional stocks edged up, extending Friday's gains. The Japanese stock market was changed and the Australian share market was slightly lower. U.S. futures contracts rose in early Asian trading after the S&P 500 rose 0.2% on Friday. The dollar was little changed and Treasury yields rose.
The calm start to the week comes ahead of the release of data on U.S. jobless claims and economic activity, while Fed Chairman Jerome Powell is expected to speak in Wyoming and acknowledge that a Federal Reserve rate cut is on the table. The meeting will cap a volatile period for global stock markets amid concerns that the Fed will not cut borrowing costs fast enough to prevent a deeper U.S. economic slowdown.
“Financial markets will be sensitive to every word from Powell,” Commonwealth Bank of Australia strategists led by Joseph Capurso wrote in a note. “We expect Powell to confirm the rate cut on Sept. 19, but expect him to retain the option to postpone or make a larger rate cut depending on the next CPI and employment reports.”
Goldman Sachs late last week lowered its chances of a U.S. recession over the next 12 months to 20% from 25%, based on data on retail sales and jobless claims from the previous week. Goldman economists led by Jan Hatzius said in a client note on Saturday that if the August jobs report, due on Sept. 6, “is substantially stronger, we would likely lower our recession probability to 15%.”
In Asia this week, investors will look to central bank meetings in Indonesia and South Korea for signs of policy easing, while Thailand's decision will be crucial after reports its new prime minister may abandon a major stimulus package.
Bank of Japan Governor Kazuo Ueda is scheduled to appear at an ad hoc Diet committee this week to discuss the July 31 interest rate hike that has rattled global markets. Meanwhile, hedge funds have turned bullish on the Japanese yen for the first time since 2021, a sharp turnaround from the extremely negative sentiment seen in early July.
In China, authorities are expected to keep preferential one- and five-year loan rates unchanged after the People's Bank of China last week promised further measures to support the economic recovery but warned against taking “drastic” steps.
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In commodities, crude oil fell for the fourth time in five sessions as traders kept a close eye on U.S.-led efforts to secure a 10-month ceasefire in the Middle East amid an escalating war between Russia and Ukraine. Gold rose above $2,500 on hopes the Federal Reserve is close to cutting interest rates. Meanwhile, iron ore suffered its worst week since early June on concerns a steel industry crisis spreading across China would reduce demand, although supplies from miners remain strong.
“How stocks perform ahead of another 'quiet' week of data releases, which will see more central bank decisions and guidance, will be important in setting the tone for a more hectic month-end,” said Bob Savage, head of market strategy and insights at BNY. “Additionally, we expect politics and geopolitical uncertainty to take center stage next week.”
Here's what's coming up:
The US Democratic National Convention will be held on Monday, August 22nd.
US-South Korea joint military exercises begin Monday
China loan prime rate, Canada and euro zone CPIs on Tuesday
Sweden and Turkey interest rate decisions on Tuesday
Indonesia and Thailand interest rate decisions Wednesday
Minutes of the July 30-31 FOMC policy meeting, preliminary revision of the BLS annual employment report, Wednesday
European Central Bank Governing Council member Fabio Panetta speaks in Rimini on Wednesday
South Korea's central bank interest rate decision on Thursday
US Vice President Kamala Harris delivered her acceptance speech on Thursday, the final night of the Democratic National Convention.
Bank of Mexico, National Bank of Poland release monetary policy minutes
Malaysia's CPI data, Mexico and Norway release GDP data
Japan's Consumer Price Index (CPI) data will be released and Bank of Japan Governor Kazuo Ueda is due to attend an extraordinary session of the Diet to discuss an interest rate hike on July 31. Friday
Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey spoke on Friday at the Kansas City Fed's annual Jackson Hole Symposium.
Some of the key market developments:
stock
S&P 500 futures were up 0.2% as of 9:34 a.m. Tokyo time.
Hang Seng futures rose 0.9%
Nikkei 225 futures (OSE) were almost unchanged
Japan's TOPIX was little changed
Australia's S&P/ASX 200 little changed
Euro Stoxx 50 futures up 0.2%
currency
The Bloomberg Dollar Spot Index was little changed.
The euro was little changed at $1.1026
The Japanese yen weakened 0.2% to 147.93 yen to the dollar.
The offshore yuan was little changed at 7.1634 yuan per dollar.
The Australian dollar rose 0.2% to $0.6684.
Cryptocurrency
Bitcoin fell 2.3% to $58,437.63.
Ether fell 1.9% to $2,615.24.
Bonds
The yield on the 10-year Treasury note rose 2 basis points to 3.90%.
Japan's 10-year government bond yield rose 2 basis points to 0.890%.
Australia's 10-year government bond yield rose 2 basis points to 3.95%.
merchandise
West Texas Intermediate crude fell 0.1% to $76.56 a barrel.
Spot gold fell 0.2% to $2,501.96 an ounce.
This story was produced with assistance from Bloomberg Automation.
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