Stocks in Asia Come Off Highs on Growth Worries: Markets Wrap




  • In Business
  • 2022-08-17 02:10:33Z
  • By Bloomberg
 

(Bloomberg) -- Stocks in Asia came off session highs on Wednesday, hampered by worries about a darkening economic outlook amid high inflation and tightening monetary policy.

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MSCI Inc.'s Asia-Pacific share index rose less than 0.5%, spanning a climb in Japan and a drop in China. S&P 500 and Nasdaq 100 futures fluctuated while European contracts edged higher.

The US stock market had posted a small gain on Tuesday, helped by robust earnings from Walmart Inc. and Home Depot Inc. Company profits have encouraged an equity rebound from June lows but are at risk of weakening as monetary settings tighten to fight price pressures.

Oil stabilized but was still in sight of a more than six-month low, underlining some of those concerns over the economic growth outlook. Treasury yields and the dollar were steady, while gold and Bitcoin wavered.

In New Zealand, the central bank raised borrowing costs by a half-point as expected and said it remains appropriate to continue tightening at pace to curb inflation. The local currency strengthened.

The revival in stocks from bear-market lows is in part a contentious bet that inflation and central bank hawkishness are peaking, making a recession less likely. The latest Federal Reserve minutes Wednesday will shed more light on whether those wagers are right.

"We expect the FOMC minutes to have a hawkish tilt," Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note. "We would not be surprised if the minutes show the FOMC considered a 100 basis points increase in July."

The latest US data were patchy. Home construction fell more than expected, while factory output increased in July for the first time in three months.

In China, where challenges from a property-sector slump and Covid curbs are multiplying, Premier Li Keqiang asked local officials from six key provinces that account for 40% of the economy to bolster pro-growth measures.

Inflation remains the most closely-watched indicator in the second half. Will it come down gradually, or will it stay elevated, forcing the Fed to keep raising rates aggressively? Have your say in the anonymous MLIV Pulse survey.

Here are some key events to watch this week:

  • Federal Reserve July minutes, Wednesday

  • New Zealand rate decision, Wednesday

  • UK CPI, US retail sales, Wednesday

  • Australia unemployment, Thursday

  • U.S. existing home sales, initial jobless claims, Conference Board leading index, Thursday

  • Fed's Esther George, Neel Kashkari speak at separate events, Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were steady of 11:07 a.m. in Tokyo. The S&P 500 rose 0.2%

  • Nasdaq 100 futures lost 0.1%. The Nasdaq 100 fell 0.2%

  • Japan's Topix index rose 0.7%

  • South Korea's Kospi index slid 0.5%

  • Hong Kong's Hang Seng index climbed 0.1%

  • China's Shanghai Composite index slipped 0.4%

  • Australia's S&P/ASX 200 index was down 0.2%

  • Euro Stoxx 50 futures gained 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was steady

  • The euro was at 1.0175 per dollar

  • The Japanese yen was at 133.94 per dollar, up 0.2%

  • The offshore yuan was at 6.7986 per dollar, down 0.1%

Bonds

  • The yield on 10-year Treasuries was at 2.81%

  • Australia's 10-year yield rose three basis points to 3.25%

Commodities

  • West Texas Intermediate crude rose 0.3% to $86.80 a barrel

  • Gold was at $1,775.60 an ounce

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©2022 Bloomberg L.P.

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