Stocks Set to Rise as Traders Await Key China Data: Markets Wrap

(Bloomberg) — A global rebound in stocks may support Asian bourses as trading gets underway Monday. Investors are awaiting key data on China’s economic activity as well as liquidity operations by its central bank.

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Futures climbed for Japan and Australia but Hong Kong’s were steady. S&P 500 and Nasdaq 100 contracts edged lower after a global share index last week hit the highest level in over three months. The dollar was little changed.

Equity markets have drawn succor from signs of slowing inflation, which stirred hopes of a Federal Reserve shift to less aggressive monetary tightening that can contain price pressures without triggering a recession.

The picture is different in the bond market, where a still-steep inversion of the Treasury yield curve points to worries that the Fed will tip the US into an economic contraction in the campaign to quell inflation. Treasury futures rose.

China’s data releases will likely show its recovery made a little more headway in July, according to Bloomberg Economics. But the world’s second-largest economy still faces property sector woes, Covid curbs and a global slowdown.

Those challenges are weighing on lending despite low interest rates. The People’s Bank of China may curb excess banking-system liquidity by withdrawing cash through its medium-term lending facility.

For markets as a whole, the big question is how long the more than 12% rebound in global stocks from June lows can last. World shares have pared this year’s losses to about 13%.

“We’re definitely heading in a better direction,” Kristina Hooper, Invesco chief global market strategist, said on Bloomberg Television. “It looks like we are passed peak for inflation. The problem is inflation is still very, very high.”

Federal Reserve Bank of Richmond President Thomas Barkin said Friday the central bank needs to keep raising interest rates until it’s clear inflation is running at its 2% target even if the economy weakens.

Investors are also keeping a wary eye on US-China tension. A US congressional delegation landed in Taiwan on Sunday for a two-day visit. House Speaker Nancy Pelosi’s stopover on the island, which China regards as part of its territory, led Beijing to conduct some of its most provocative military drills.

Meanwhile, five of China’s largest state-owned companies on Friday announced plans to delist from US exchanges. The two countries are in a dispute about allowing American regulators to inspect audits of Chinese businesses.

Here are some key events to watch this week:

  • Earnings include Walmart, Target, Home Depot, Tencent

  • China data including retail sales, industrial production, Monday

  • Hedge funds’ 13F filings, Monday

  • Federal Reserve July minutes, Wednesday

  • New Zealand rate decision, Wednesday

  • UK CPI, US retail sales, Wednesday

  • Australia unemployment, Thursday

  • U.S. existing home sales, initial jobless claims, Conference Board leading index, Thursday

  • Fed’s Esther George, Neel Kashkari speak at seperate events, Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.2% as of 8:30 a.m. in Tokyo. The S&P 500 rose 1.7% Friday

  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 2.1% Friday

  • Nikkei 225 futures climbed 0.7%

  • Australia’s S&P/ASX 200 index futures added 0.6%

  • Hang Seng Index futures were little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was at $1.0259

  • The Japanese yen was at 133.36 per dollar

  • The offshore yuan was at 6.7376 per dollar

Bonds

Commodities

  • West Texas Intermediate crude was at $91.74 a barrel, down 0.4%

  • Gold was at $1,800.10 an ounce, down 0.1%

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