Shares in Asia Advance With Jackson Hole in Focus: Markets Wrap

(Bloomberg) — Asian stocks advanced on Monday, as traders looked ahead to the Federal Reserve’s annual meeting at Jackson Hole for any signals on the future interest rate path.

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A gauge for the region’s stocks climbed, extending Friday’s gains. Equity markets in China rose, led by tech stocks. Japanese shares fluctuated and those for Australia edged lower. US futures contracts were up in Asian trading after the S&P 500 rose 0.2% on Friday. The dollar was little changed, while Treasury yields advanced.

Monday’s activity comes ahead of US jobless claims and economic data, while Federal Reserve Chairman Jerome Powell is expected to give fresh insights on the course of monetary policy when he speaks in Wyoming. The meeting caps a volatile period for global stocks, partially driven by concern the Fed wouldn’t reduce borrowing costs fast enough to prevent a deeper US slowdown.

“It’s almost impossible for him to avoid the topic of future rate cuts,” Homin Lee, senior macro strategist at Banque Lombard Odier & Cie SA in Singapore, told Bloomberg Television. “We do think he’s going to drop a few hints.”

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

Ebbing signs of a US recession have pushed emerging-market currencies higher. The Bloomberg Asia dollar index gained as much as 0.5% on Monday to the highest level since March, with the Thai baht and Malaysian ringit leading gains in the region.

Elsewhere in Asia this week, investors will be looking to central bank meetings in Indonesia and South Korea for signs of policy easing, while the Thailand decision will be crucial following reports the nation’s new prime minister may abandon a key stimulus package.

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

In China, authorities are expected to keep the 1- and 5-year loan prime rates steady on Tuesday after the People’s Bank of China last week pledged further steps to support economic recovery, while cautioning that it won’t be adopting “drastic” measures.

In commodities, oil declined for the fourth time in five sessions as traders tracked US-led efforts to secure a cease-fire in the 10-month old Middle East, while the Russia-Ukraine war is escalating. Gold wavered near an all-time high on hopes the Fed is edging closer to cutting rates. Elsewhere, iron-ore had it worst week since early June on concern that a steel-industry crisis rippling across China will sap demand, while supplies from miners remain robust.

Here’s what’s coming up:

• US Democratic National Convention takes place Aug. 22, Monday

• Start of annual US-South Korea joint military exercise, Monday

• China loan prime rates, Canada and euro area CPI, Tuesday

• Sweden and Turkey interest rate decisions, Tuesday

• Indonesia and Thailand interest rate decisions, Wednesday

• US FOMC minutes of of July 30-31 policy meeting, BLS preliminary annual payrolls revision, Wednesday

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

• South Korea central bank rate decision, Thursday

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

• Mexico’s central bank, National Bank of Poland issues monetary policy minutes

• Malaysia CPI data, while Mexico and Norway publish GDP data

• Japan CPI data due, and Bank of Japan Governor Kazuo Ueda to attend special session at Japan’s parliament to discuss July 31 rate hike, Friday

• Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey speak at Kansas City Fed’s annual Jackson Hole symposium, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 11:09 a.m. Tokyo time

• Nikkei 225 futures (OSE) fell 0.3%

• Japan’s Topix fell 0.1%

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

• Hong Kong’s Hang Seng rose 1.4%

• The Shanghai Composite rose 0.7%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro was little changed at $1.1031

• The Japanese yen rose 0.1% to 147.47 per dollar

• The offshore yuan rose 0.2% to 7.1499 per dollar

• The Australian dollar rose 0.2% to $0.6683

Cryptocurrencies

• Bitcoin fell 2% to $58,599.58

• Ether fell 1.2% to $2,634.48

Bonds

• The yield on 10-year Treasuries was little changed at 3.89%

• Japan’s 10-year yield advanced 2.5 basis points to 0.895%

• Australia’s 10-year yield was little changed at 3.93%

Commodities

• West Texas Intermediate crude was little changed

• Spot gold fell 0.3% to $2,499.69 an ounce

This story was produced with the assistance of Bloomberg Automation.

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