(Bloomberg) — Asian stocks fell as traders braced for a week of political risks and inflation data that could help guide bets on the outlook for global interest rates.
Most read on Bloomberg
The Japanese yen was trading below 160 to the dollar as top foreign exchange official Masato Kanda said authorities were ready to step in to support it around the clock if necessary. The Asian currency indicator changed little.
European and US stock futures were also weaker after the S&P 500 fell on Friday.
The moves come as markets find themselves at a critical juncture for their positioning in the second half of 2024, with the outlook for policy rates from central banks from New Zealand to Japan and the United States uncertain. Inflation figures from Australia and Tokyo, as well as the Federal Reserve’s preferred gauge of consumer costs, may provide some clues, but political risks remain significant.
“How the U.S. dollar trades through the end of the month will be important to the direction of risk in the markets,” said Bob Savage, head of strategy and market insights at BNY Mellon in New York. .
The first debates of the British prime minister and the American presidency are planned, and the first round of the French legislative elections is expected to take place this weekend. That should “set the tone for fiscal risks,” Savage said.
China’s weakness
China’s exchange rate was little changed on Monday, at 7.1201 per dollar, after the country’s assets were sold off again last week as policymakers showed no urgency to deploy more containment measures. RELAUNCH.
The yuan’s weakness is symptomatic of deteriorating sentiment toward the world’s second-largest economy, which is also seeing a rebound in the bond market as investors seek safe-haven assets. Benchmark yields fell to all-time lows amid mixed economic data and expectations of further stimulus.
“In the short term, especially in the third quarter, we see the CNY coming under more depreciation pressure,” Becky Liu, head of China macro strategy at Standard Chartered Plc, said in an interview with Bloomberg TV .
Later this week, the Federal Reserve’s favored inflation gauges are poised to post the most moderate monthly advances since late last year – which could pave the way for officials to begin lowering rates. interest rate. 10-year Treasury yields remained stable in Asian trading.
U.S. stocks fell on Friday, and traders and strategists began to wonder how long this year’s rally might last, given shifting bets on central bank rate cuts and election uncertainties in Europe.
The S&P 500 index has likely recorded most of the gains it will experience this year as investors grow increasingly nervous about high valuations in the stock market, according to the latest Bloomberg Markets Live Pulse survey released Monday.
Signs of nervousness are evident with nearly half of respondents saying stocks will see the start of a correction of at least 10% this year.
“Ultimately, the current combination of high fiscal spending and tight interest rate policies is crowding out many businesses and consumers in a way that is unsustainable,” wrote Morgan Stanley strategist Michael Wilson, in a note. “Investors have recognized this result by bidding up the few stocks of companies that are doing well in this environment.”
In the commodities sector, oil extended its decline from the previous session to $80 a barrel amid a strengthening greenback and technical indicators suggesting the recent rally has gone too far. Gold was little changed, after racking up a loss the previous week as investors reduced their bets on a U.S. rate cut.
Key events this week:
The BoJ publishes a summary of opinions from its June policy meeting on Monday
Singapore CPI, Monday
Unemployment rate and industrial production in Taiwan, Monday
Unemployment and GDP in Argentina, Monday
Bank of Canada Governor Tiff Macklem speaks Monday
San Francisco Fed President Mary Daly speaks Monday
Fed Governor Christopher Waller speaks Monday
Australian consumer confidence, Tuesday
Malaysia CPI, Tuesday
Canadian CPI, Tuesday
Spanish GDP, Tuesday
Consumer Confidence from the American Conference Board, Tuesday
Fed Governor Lisa Cook and Fed Governor Michelle Bowman will speak on Tuesday.
Australian CPI, Wednesday
British Prime Minister Rishi Sunak and Labor leader Keir Starmer debate Wednesday
The 3rd International Monetary Policy Conference of the Bank of Finland begins on Wednesday
RBA Deputy Governor Andrew Hauser speaks on Thursday
Retail sales in Japan, Thursday
Philippines rate decision Thursday
Chinese industrial profits, Thursday
Eurozone economic confidence, consumer confidence, Thursday
The BoE publishes its financial stability report on Thursday
Rate decision in Sweden on Thursday
Turkey rate decision on Thursday
US durable goods, initial jobless claims, GDP, wholesale inventories, Thursday
Mexico: unemployment, trade and rate decision, Thursday
Japan Tokyo CPI, unemployment, industrial production, Friday
British GDP, Friday
IPC France, Friday
IPC Italy, Friday
IPC Spain, Friday
GDP of the Czech Republic, Friday
U.S. PCE Inflation, Spending and Income, University of Michigan Consumer Sentiment, Friday
Richmond Fed President Thomas Barkin speaks Friday
Unemployment in Brazil, Friday
Chile industrial production, unemployment, Friday
Unemployment in Colombia, decision on rates, Friday
Some of the main market movements:
Actions
S&P 500 futures fell 0.1% as of 12:58 p.m. Tokyo time
Nikkei 225 (OSE) futures rose 0.3%
Japanese Topix rose 0.5%
Australia’s S&P/ASX 200 fell 0.7%
Hong Kong’s Hang Seng fell 1%
The Shanghai Composite index fell 0.7%
Euro Stoxx 50 futures fell 0.2%
Currencies
Bloomberg Dollar Spot Index little changed
The euro was little changed at $1.0692
The Japanese yen was little changed at 159.69 per dollar
The offshore yuan was little changed at 7.2890 per dollar.
Cryptocurrencies
Bitcoin fell 1.4% to $62,836.74
Ether fell 0.9% to $3,401.54
Obligations
Raw materials
West Texas Intermediate crude was little changed
Spot gold rose 0.2% to $2,325.63 an ounce
This story was produced with the help of Bloomberg Automation.
–With the help of Aya Wagatsuma.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
