Asian stocks rise slightly as Jackson Hole takes center stage: Market overview

(Bloomberg) — Asian shares broadly rose on Monday ahead of key decisions by the region’s central bank this week and its annual meeting in Jackson Hole.

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A gauge of the region’s stocks rose slightly, extending Friday’s gains. Stock markets in Japan fluctuated, while those in Australia fell slightly. U.S. futures contracts rose in early Asian trading after the S&P 500 rose 0.2% on Friday. The dollar was little changed, while Treasury yields rose.

The quiet start to the week comes ahead of U.S. jobless claims and economic activity data, while Jerome Powell is expected to confirm that the Federal Reserve is planning rate cuts when he speaks in Wyoming. The meeting caps a volatile period for global equities, driven in part by concerns that the Fed will not cut borrowing costs quickly enough to prevent a deeper U.S. slowdown.

“Financial markets will be sensitive to his every word,” Commonwealth Bank of Australia strategists led by Joseph Capurso wrote in a note. “We expect Powell to give the green light for a cut on September 19, but we expect Powell to retain the option for delayed cuts or larger cuts depending on the next CPI and payrolls.”

Goldman Sachs over the weekend lowered the probability of a U.S. recession in the coming year to 20% from 25%, citing last week’s retail sales and jobless claims. If the August jobs report, due Sept. 6, “looks reasonably good, we would likely cut our recession probability to 15%,” Goldman economists led by Jan Hatzius wrote in a report to clients on Saturday.

In Asia, investors will be watching central bank meetings in Indonesia and South Korea this week to see if there is any easing of policy. Thailand’s decision will also be crucial, following reports that the country’s new prime minister may abandon a major stimulus package.

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

In China, authorities are expected to keep key interest rates on one- and five-year loans unchanged after the People’s Bank of China last week pledged further steps to support the economic recovery. However, the bank warned against taking “drastic” measures.

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In commodities, oil fell for the fourth time in five sessions as traders watched U.S.-led efforts to broker a ceasefire in the 10-month-old Middle East as the war between Russia and Ukraine escalates. Gold edged past $2,500 on hopes the Fed is closer to cutting interest rates. Elsewhere, iron ore had its worst week since early June on concerns that a steel crisis rippling through China will sap demand, while miners’ supplies remain robust.

“How markets trade equity markets around another “quiet” week for data, filled with more central bank decisions and guidance, will be important in setting the tone for a more hectic end to the month,” said Bob Savage, head of market strategy and insights at BNY. “Furthermore, expect the week ahead to be dominated by the unknowns of politics and geopolitics.”

This is what’s going to happen:

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

• US-South Korea annual joint military exercise begins Monday

• Chinese loan prime rates, Canada and Eurozone CPI, Tuesday

• Sweden and Turkey interest rate decisions, Tuesday

• Indonesia and Thailand interest rate decisions, Wednesday

• Minutes of the July 30-31 U.S. FOMC Policy Meeting, Preliminary Revision of BLS Annual Payroll Reports, Wednesday

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

• South Korea Central Bank Interest Rate Decision, Thursday

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

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

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

• Japanese CPI data is expected and Bank of Japan Governor Kazuo Ueda will attend a special session of the Japanese 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:

Shares

• S&P 500 futures rose 0.2% at 9:34 a.m. Tokyo time

• Hang Seng futures rose 0.9%

• Nikkei 225 futures (OSE) were little changed

• The Japanese Topix has hardly changed

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

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro remained virtually unchanged at $1.1026

• The Japanese yen fell 0.2% to 147.93 per dollar

• The offshore yuan remained virtually unchanged at 7.1634 per dollar

• The Australian dollar rose 0.2% to $0.6684

Cryptocurrency

• Bitcoin fell 2.3% to $58,437.63

• Ether fell 1.9% to $2,615.24

Bonds

• The yield on 10-year government bonds rose two basis points to 3.90%

• Japan’s 10-year yield rose two basis points to 0.890%

• The Australian 10-year yield rose two basis points to 3.95%

Raw materials

• West Texas Intermediate crude oil fell 0.1% to $76.56 a barrel

• Spot gold fell 0.2% to $2,501.96 an ounce

This story was produced with the help of Bloomberg Automation.

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