Stocks in Asia advance with Jackson Hole in focus: market turnaround

(Bloomberg) — Asian shares rose Monday as traders looked to the Federal Reserve’s annual meeting in Jackson Hole for signals on the future path of interest rates.

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A gauge of the region’s stocks rose, extending Friday’s gains. Stock markets in China rose, led by technology stocks. Japanese shares fluctuated and Australia’s fell. U.S. futures contracts rose in Asian trading after the S&P 500 rose 0.2% on Friday. The dollar was little changed, while government bond yields rose.

Monday’s activity comes ahead of US jobless claims and economic data, with Federal Reserve Chairman Jerome Powell expected to provide fresh insights on the stance of monetary policy when he speaks in Wyoming. The meeting caps a volatile period for global stocks, driven in part by concerns that the Fed would not cut borrowing costs quickly enough to prevent a deeper slowdown in the US.

“It is 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 think he’s going to drop a few hints.”

Goldman Sachs this weekend cut the chance of a US recession in the coming year from 25% to 20%, citing last week’s data on retail sales and unemployment benefits. If the August jobs report, due Sept. 6, “looks reasonably good, we would likely reduce our chance of a recession to 15%,” Goldman economists led by Jan Hatzius wrote in a report to clients on Saturday.

Fading signs of a recession in the US have pushed emerging market currencies higher. The Bloomberg Asia Dollar Index rose as much as 0.5% on Monday to the highest level since March, with the Thai baht and Malaysian ringit leading gainers in the region.

Elsewhere in Asia, investors will be watching central bank meetings in Indonesia and South Korea this week for signs of policy easing, while the decision on Thailand will be crucial after reports that the country’s new prime minister will make a key stimulus package could be abandoned.

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

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In China, authorities are expected to keep 1- and 5-year interest rates steady on Tuesday, after the People’s Bank of China last week pledged further steps to support economic recovery while warning it will not take “drastic” measures .

In commodities, oil fell for the fourth time in five sessions as traders tracked US-led efforts to secure a ceasefire in the 10-month-old Middle East as the war between Russia and Ukraine escalates . Gold has been hovering near a record high on hopes that the Fed is moving closer to a rate cut. Elsewhere, iron ore suffered its worst week since early June on concerns that a steel industry crisis sweeping across China will undermine demand, while supply of miners remains robust.

This is what will happen:

• The US Democratic National Convention takes place on Monday, August 22

• Start of the annual joint military exercise between the US and South Korea on Monday

• Prime rates for Chinese loans, CPI for Canada and euro area, Tuesday

• Interest rate decisions on Sweden and Turkey, Tuesday

• Interest rate decisions on Indonesia and Thailand, Wednesday

• US FOMC minutes from July 30-31 policy meeting, BLS preliminary annual payroll review, Wednesday

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

• The interest rate decision of the central bank of South Korea will follow on Thursday

• US Vice President Kamala Harris will deliver an acceptance speech on Thursday on the final evening of the Democratic National Convention

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

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

• Japanese CPI data emerges and Bank of Japan Governor Kazuo Ueda will attend a special session of Japan’s parliament on Friday to discuss the July 31 rate hike

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

Some of the major moves in the 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 government bonds was little changed at 3.89%

• The Japanese ten-year yield rose by 2.5 basis points to 0.895%

• The Australian ten-year yield was little changed at 3.93%

Raw materials

• West Texas Intermediate crude was little changed

• Gold fell 0.3% to $2,499.69 an ounce

This story was produced with the help of Bloomberg Automation.

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