Shares in Asia are poised to follow Wall Street gains after US economic reports pointed to slowing growth, adding to bets the Federal Reserve is nearing the end of its tightening cycle.
Equity futures for Japan, Australia and Hong Kong all rose. The S&P 500 advanced for a fourth day Wednesday, extending this week’s gains to 2.5%. The tech-heavy Nasdaq 100 has climbed 3.5% this week.
Treasury yields edged lower across the curve after US gross domestic product rose at a 2.1% annualized pace in the second quarter, lower than the government’s previous estimate. An industry gauge of employment showed fewer jobs were added than economists forecast, while a measure of consumer confidence was also softer than expected.
The underwhelming numbers supported predictions for the Fed to ease back on interest-rate hikes. Swap contracts are now pricing in less than a 50% chance of another quarter-point increase this year.
“Investors are reacting with a ‘bad news is good news’ approach, betting that a slowing economy will lead to a less aggressive Federal Reserve,” said Mark Hackett, chief of investment research at Nationwide Funds Group. “This has calmed investors, but adds an element of risk if the pendulum continues to swing, as an earnings recovery is critical for a continued strong market.”
In China, investors are focused on official purchasing managers index data due Thursday that is forecast to show further weakness in manufacturing and slowing growth in services.
Additional signs of official support for the world’s second largest economy emerged on Wednesday. The People’s Bank of China is drafting preliminary policies to give private businesses better access to funding, local media reported.
Elsewhere, Country Garden Holdings Co. signaled it may default on its debt after the embattled Chinese developer posted a record first-half loss of almost $7 billion.
In US corporate news, Apple is testing the use of 3D printers to produce smartwatch components, according to people with knowledge of the matter. US prosecutors are investigated a Tesla Inc. plan to purchase hard-to-get construction materials. Visa Inc. and Mastercard Inc. shares rose on plans to boost the fees charged to retailers.
The price of oil clung to gains in early Asian trading after ending Wednesday with its fifth daily advance. Gold edged higher after a string of gains this week. Bitcoin traded above $27,000.
Key events this week:
- China manufacturing PMI, non-manufacturing PMI, Thursday
- Japan industrial production, retail sales, Thursday
- Eurozone CPI, unemployment, Thursday
- ECB publishes account of July monetary policy meeting, Thursday
- US personal spending and income, initial jobless claims, Thursday
- China Caixin manufacturing PMI, Friday
- Eurozone S&P Global Eurozone Manufacturing PMI, Friday
- South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
- Boston Fed President Susan Collins speaks at virtual event, Friday
- US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 7:10 a.m. Tokyo time. The S&P 500 rose 0.4%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.6%
- Nikkei 225 futures rose 0.4%
- Hang Seng futures rose 0.9%
- S&P/ASX 200 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0927
- The yen was little changed at 146.17 per dollar
- The offshore yuan was little changed at 7.2997 per dollar
Cryptocurrencies
- Bitcoin rose 0.2% to $27,299.88
- Ether was little changed at $1,704
Bonds
- The yield on 10-year Treasuries was little changed at 4.11%
- Japan’s 10-year yield advanced one basis point to 0.650%
- Australia’s 10-year yield declined three basis points to 4.07%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold rose 0.1% to $1,944.36 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rita Nazareth.
