(Bloomberg) — Global stocks are closing in on a fourth month of gains, lifted by hopes of a soft landing for the US economy and the prospect of lower interest rates.
Most Read from Bloomberg
Shares in China led the advance in Asia, with sentiment boosted by a slew of upbeat earnings and the yuan’s rise to levels unseen in more than a year. US futures also rose, while their European counterparts were slightly lower ahead of the release of the Federal Reserve’s preferred inflation gauge later Friday.
Bets for a Fed rate cut continue to dominate global markets, after data showed that the central bank has managed to tame inflation without the economy tumbling into recession. US output grew at a slightly stronger pace in the second quarter than initially reported, reflecting an upward revision to consumer spending that more than offset weaker activity in other categories.
“The US economy looks like it’s moving from very strong to strong,” said Thomas Taw, BlackRock’s head of APAC investment strategy, told Bloomberg TV. “The data will continue to weaken, but you kind of have to marry that off with how much is inflation going to weaken in the US.”
Expectations for monetary easing have put Treasuries on course for their longest monthly winning streak in three years. But the wagers have weighed on the dollar, with a Bloomberg gauge of the currency set for its worst monthly performance this year. The dollar was steady on Friday.
Japan’s 10-year bond yield edged higher after data showed price pressures in Tokyo quickened in August, backing the case for a further normalization of monetary policy in the country.
Over in China, authorities are considering allowing homeowners to refinance as much as $5.4 trillion in mortgages to lower borrowing costs for millions of families and boost consumption.
Payrolls Data
Aside from the core PCE data due later in the session, the big focus for financial markets will be next week’s US employment numbers. Nonfarm payrolls figures on Sept. 6 will be scrutinized for clues as to whether the Fed will cut rates in September, after Chair Jerome Powell opened the door to easing at his Jackson Hole speech earlier this month.
US interest-rate cuts are likely to have knock-on effects for central banks the world over. In Asia analysts expect authorities in Indonesia and India to follow suit and potentially lower borrowing costs.
“The soothing Jackson Hole dovish messages continue to resonate, while focus turns to the US employment report to assess if a soft landing remains on track,” Barclays Plc analysts including Gabriel Casillas wrote in a note.
Meanwhile, shares of WuXi AppTec and WuXi Biologics are in focus as House Republican leaders plan votes early next month on a series of measures targeting Chinese companies. On the earnings front, Bank of China reported declines in first-half net income and commissions.
In the commodities space, gold edged lower while oil extended gains on positive US economic data and worsening supply disruptions in Libya. Iron ore edged higher after rallying by about 10% in 10 days to breach $100 a ton.
Key events this week:
-
Eurozone CPI, unemployment, Friday
-
US personal income, spending, PCE; consumer sentiment, Friday
Some of the main moves in markets:
Stocks
-
S&P 500 futures rose 0.2% as of 6:33 a.m. London time
-
Nasdaq 100 futures rose 0.3%
-
Futures on the Dow Jones Industrial Average were little changed
-
The MSCI Asia Pacific Index rose 0.7%
-
The MSCI Emerging Markets Index rose 0.6%
-
S&P 500 futures rose 0.2%
-
Nikkei 225 futures (OSE) rose 0.3%
-
Japan’s Topix rose 0.3%
-
Australia’s S&P/ASX 200 rose 0.3%
-
Hong Kong’s Hang Seng rose 1.9%
-
The Shanghai Composite rose 1.3%
-
Euro Stoxx 50 futures fell 0.2%
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro was little changed at $1.1076
-
The Japanese yen rose 0.1% to 144.81 per dollar
-
The offshore yuan rose 0.2% to 7.0795 per dollar
-
The British pound was little changed at $1.3167
Cryptocurrencies
-
Bitcoin fell 1.2% to $58,811
-
Ether fell 1% to $2,514.68
Bonds
-
The yield on 10-year Treasuries was little changed at 3.86%
-
Germany’s 10-year yield advanced one basis point to 2.27%
-
Britain’s 10-year yield advanced two basis points to 4.02%
-
Australia’s 10-year yield advanced two basis points to 3.97%
Commodities
-
Spot gold fell 0.3% to $2,514.79 an ounce
-
West Texas Intermediate crude rose 0.3% to $76.14 a barrel
-
Spot gold fell 0.3% to $2,514.79 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Zhu.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
