Asian equities and US futures rise as sentiment improves: market close

(Bloomberg) – Stocks in Asia rose after US stocks rallied and Treasury yields fell after weak economic reports supporting the case for a Federal Reserve freeze on interest rate hikes.

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Stock benchmarks in Japan, Australia and South Korea rose, while stocks in Hong Kong rose, led by a rise in technology stocks. The S&P 500 rose 1.1% on Wednesday, its best session since June, while the Nasdaq 100 gained 1.6%. Futures contracts for the two benchmarks continued to rally after Nvidia Corp. made positive profits.

The chipmaker, a key component of both US benchmarks, rose in extended trading after results forecast quarterly sales of $16 billion, beating $12.5 billion expected by analysts. The company’s Asia-based suppliers also rallied, and the technology-sensitive South Korean won also appreciated.

Australian and New Zealand bond yields fell while government bond yields stabilized after falling across the curve on Wednesday. The 10-year yield fell 13 basis points after hitting a 2007 high this week, while policy-sensitive 2-year yields fell 8 basis points to below 5%.

Aiding these moves was weaker-than-expected flash US PMI data for August, reflecting disappointing euro-zone data.

“In terms of economic data, bad news looks like good news for the market,” said Grace Tam, chief investment advisor for Hong Kong at BNP Paribas Wealth Management at Bloomberg Television. “As for US and European PMIs, this is good news for the market as they now expect no more rate hikes in the future. This is tailwind for AI and tech stocks.”

The story goes on

However, there remained areas of concern. In China, the $2.9 trillion trust industry is showing signs of strain, adding further pressure on the economy, while insiders also fear efforts to improve the health of local government financing tools may not work as hoped. The People’s Bank of China continued to support the yuan, setting the daily reference rating stronger than expected.

Meanwhile, the Bank of Korea left interest rates unchanged, as did Sri Lankan policymakers. Traders will also be keeping an eye on Bank Indonesia’s interest rate decision today.

Jackson Hole

The fall in Treasury yields weighed on the dollar and came ahead of Powell’s speech at Friday’s Jackson Hole symposium.

The Fed chair is expected to outline the final steps in the central bank’s anti-inflation campaign after weeks of pressure on stocks and government bonds, raising the cost of borrowing for businesses and households.

“The recent rise in bond yields has pushed up mortgage and corporate lending rates, contributed to the fall in equity prices and created upward pressure on the dollar,” said Krishna Guha, vice chairman of Evercore ISI. “The Fed must take tightening financial conditions into account when setting interest rates in the coming months, including deciding on a September hike.”

US mortgage applications for home purchases fell to their lowest level in almost three decades. A US government report also said year-to-date job growth is expected to be revised down by about 300k through March.

Elsewhere in the company news, Esmark Inc. said it had not received a takeover bid for US Steel Corp. and WeWork Inc. is rounding up advisers to help with a restructuring as the company struggles with a hefty debt burden, insiders tell The Reason.

In commodities, oil prices slipped for the fourth day as the improved supply outlook hit a market grappling with sluggish demand from the biggest importers. Gold rose slightly.

Important events this week:

• US Initial Jobless Claims, Durables, Thursday

• The Kansas City Fed’s annual economic policy symposium in Jackson Hole begins Thursday

• Japan Tokyo CPI, Friday

• University of Michigan consumer sentiment, Friday

• Fed Chair Jerome Powell and ECB President Christine Lagarde address Friday’s conference in Jackson Hole

Some of the key moves in the markets:

Shares

• S&P 500 futures were up 0.7% as of 12:03 am Tokyo time. The S&P 500 rose 1.1%

• Nasdaq 100 futures were up 1.3%. The Nasdaq 100 rose 1.6%

• Japan’s Topix rose 0.2%

• Australia’s S&P/ASX 200 rose 0.4%

• Hong Kong’s Hang Seng rose 1.1%

• The Shanghai Composite has hardly changed

• Euro Stoxx 50 futures up 0.4%

currencies

• The Bloomberg Dollar Spot Index is little changed

• The euro was little changed at $1.0865

• The Japanese yen fell 0.1% to 145.01 per dollar

• The offshore yuan was little changed at 7.2867 per dollar

• The Australian dollar was little changed at $0.6474

cryptocurrencies

• Bitcoin fell 0.8% to $26,375.81

• Ether fell 0.7% to $1,673

Tie up

• The 10-year government bond yield was little changed at 4.20%

• Japan’s 10-year yield fell 1.5 basis points to 0.660%

• Australia’s 10-year yield fell eight basis points to 4.12%

raw materials

• West Texas Intermediate crude fell 0.5% to $78.46 a barrel

• Spot gold rose 0.2% to $1,919.83 an ounce

This story was created with the support of Bloomberg Automation.

– With the support of Rita Nazareth.

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