Stocks climb ahead of busy week for economic data: Markets wrap

(Bloomberg) — Shares climbed for a second session as markets shifted focus to key US data prints this week for further insight into the health of the world’s biggest economy.

Most Read from Bloomberg

A gauge of Asian equities for the region rose Monday, with benchmarks in Hong Kong, Taiwan, Australia and Korea all advancing. European and US futures were also in the green. Markets in Japan were closed for a holiday.

A semblance of calm returned after markets were ravaged early last week from fears the Federal Reserve is waiting too long to cut interest rates. The Cboe Volatility Index (^VIX) — Wall Street’s fear gauge — has reversed off its highest since the early days of the Covid-19 pandemic.

“The skies are not fully clear yet, but there are several reasons that suggest to us that some relatively calmer seas are ahead of us,” analysts at Nomura Holdings Inc. (NMR) said in a note, citing a lessening of fears about a US recession and lower chances of a very hawkish Bank of Japan as among the grounds for optimism.

Bucking the trend of volatility easing is China, where authorities are fighting against a ferocious bond rally. At least four Chinese brokerages have started fresh measures to cut back trading of domestic government debt since last week, people familiar with the matter said, with worries that a sudden reversal may cause financial instability.

The yen surged last week as traders slashed bearish bets following the BOJ’s rate hike, forcing a negative feedback loop as investors dumped carry trades that ricocheted across global markets. The earnings of UBS Group AG (UBS) are due on Aug. 14, and details on how clients responded to that volatility is likely to be a big focus.

The BOJ and Fed are the biggest variables to drive trading, said Taosha Wang, a portfolio manager at Fil Asia Holdings Pte Ltd. For the US, “I don’t think the market has agreed — either a recession, which we think is excessive, or a soft landing,” she told Bloomberg Television’s Yvonne Man and David Ingles on Monday.

The big draw for market participants this week will be US consumer price index on Wednesday, which is expected to have risen 0.2% from June for both the headline figure and the so-called core gauge that excludes food and energy. The modest moves, however, may not be enough to derail the Fed from a widely anticipated interest-rate cut next month.

At the weekend, Fed Governor Michelle Bowman said she still sees upside risks for inflation and continued strength in the labor market, signaling she may not be ready to support an interest-rate decrease when US central bankers next meet in September. Money markets have fully priced a rate cut in September and about 100 basis points of easing for the year, according to swaps data compiled by Bloomberg.

In commodities, oil rose Monday, extending a 4.5% gain last week. Some of the top US oil refiners are throttling back operations at their facilities this quarter, adding to concerns that a global glut of crude is forming. Gold edged higher.

Some key events this week:

• India CPI, industrial production, Monday

• Australia consumer confidence, Tuesday

• Japan PPI, Tuesday

• South Africa unemployment, Tuesday

• UK jobless claims, unemployment, Tuesday

• Home Depot earnings, Tuesday

• US PPI, Tuesday

• Atlanta Fed President Raphael Bostic speaks, Tuesday

• Eurozone GDP, industrial production, Wednesday

• New Zealand rate decision, Wednesday

• South Korea jobless rate, Wednesday

• Poland CPI, Wednesday

• UK CPI, Wednesday

• US CPI, Wednesday

• Australia unemployment, Thursday

• Japan GDP, industrial production, Thursday

• Philippines rate decision, Thursday

• China home prices, retail sales, industrial production, Thursday

• Norway rate decision, Thursday

• UK industrial production, GDP, Thursday

• US initial jobless claims, retail sales, industrial production, Thursday

• St. Louis Fed President Alberto Musalem, Philadelphia Fed President Patrick Harker speak, Thursday

• Alibaba Group, Walmart earnings, Thursday

• Hong Kong jobless rate, GDP, Friday

• Taiwan GDP, Friday

• US housing starts, University of Michigan consumer sentiment, Friday

• Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 3:38 p.m. Tokyo time

• Hong Kong’s Hang Seng was little changed

• The Shanghai Composite fell 0.3%

• Euro Stoxx 50 futures rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0921

• The Japanese yen fell 0.4% to 147.24 per dollar

• The offshore yuan fell 0.1% to 7.1817 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $58,361.36

• Ether fell 0.3% to $2,550.78

Bonds

Commodities

• West Texas Intermediate crude rose 0.5% to $77.21 a barrel

• Spot gold rose 0.2% to $2,436.27 an ounce

This story was produced with the assistance of Bloomberg Automation.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.