Japan leads Asian stocks ahead of Powell: Market Wrap

(Bloomberg) — Eastern stocks led gains in Asia as semiconductor-related stocks edged their U.S. friends higher. Traders are awaiting Jerome Powell’s testimony to Congress.

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The Nikkei 225 Keep Reasonable climbed to a record, taking its advance for the year to more than 23%. Equity indexes in Australia also rose, with US reserve futures later closing 0.1% higher on Monday. The S&P 500 reached its 35th all-time top for the year. Mainland China and Hong Kong stocks declined, outpacing the greenback and leading the way towards maximum primary lows.

Data generation stocks were the biggest gainers in the MSCI Asia Pacific index. The bias toward AI’s top risk stocks is the highest it has been since 2019, according to Citigroup, driven by the market’s view of age expansion and option pricing.

Investors are waiting for Powell’s testimony starting on Tuesday for guidance on the Fed’s outlook. They face pressure from lawmakers growing impatient with interest rate cuts and others dissatisfied with the Fed’s untouched plan to boost capital requirements for Wall Boulevard lenders. Markets are expecting two tariff cuts this year, with about 70% expecting the first cut in September, according to swaps data compiled by Bloomberg.

“With recent signs of softer growth and the labor market, markets will be watching closely if Powell gives any indication on the timing of a rate cut,” said Carol Kong, strategist at Australia’s Commonwealth Cupboard in Sydney. “Market pricing for a cut in September could increase and the US dollar could decline further if Powell’s comments are perceived as dovish.”

In China, as buyers remain uncertain about the central store’s unused liquidity operation, which was unveiled on Monday, policymakers have tightened their grip on interest rates and brought in greater control over floating lending rates. Traders learned of the exit as if China’s Social Cabinet had just raised rates, triggering a selloff in the bond market. Marketplace contributors are also looking forward to one of the country’s largest annual coverage conferences coming closer to the important date.

Japan’s Cabinet will hold face-to-face talks with market participants at key conferences over the next few days, aiming to assess a sensible month for the relaxation of its bond purchases to be announced later this week. Calls for higher yields in eastern five-year public sales came at the same time as investors speculated about when and what type of bond buying the BOJ would reduce again.

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Australian consumer sentiment deteriorated in July as households worried about the possibility of additional fees rising as inflation remained more stable than expected. Australia’s bonds reflected Monday’s Treasury outflow, with shorter-term notes underperforming longer-term notes.

long favor

Bond markets appear to be starting the final stretch of 2024 with a long bias, according to Strategos’ Thomas Tzitzouris, as economic data weakens due to a fall payout cut. Despite long positions, there are early signs of shorts coming back, he said.

“When we break down the positioning data, we see a market that, despite showing a long bias in anticipation of a cut, is not entirely convinced that will happen with shorts gradually returning to the market,” Tzitzouris. he said.

The S&P 500 hit 5,570 on Monday ahead of Powell’s testimony, and investors braced for earnings from one of the greatest U.S. banks, which unofficially kicks off second-quarter reporting season on Friday. Hopes for the season rest at someone’s feet. The number of analysts’ upgrades to estimates has outnumbered downgrades, with previous forecasts for earnings 12 months ahead reaching an all-time top.

Among commodities, oil was little changed after two days of decline as Hurricane Beryl was less likely to cause major disruption to crude infrastructure in Texas. Gold fell later on Monday, its biggest fall in two weeks. Reduction in copper crept.

Major occasions of this date:

• China combination financing from Tuesday, providing cash, unused yuan loan

• Jerome Powell delivers semi-annual testimony to the Senate Banking Committee on Tuesday

• US Treasury Secretary Janet Yellen will testify before the Regional Monetary Services and Products Committee on Tuesday

• The Fed’s Michael Barr and Michelle Bowman talk Tuesday

• China PPI, CPI, Wednesday

• Jerome Powell testifies to the Regional Monetary Services and Products Committee on Wednesday

• Fed’s Austin Goolsby, Michelle Bowman and Lisa Diner discuss preparations, Wednesday

• US CPI, preliminary jobless claims, Thursday

• Fed’s Rafael Bostic and Alberto Musallem spoke on Thursday

• China Industry, Friday

• Michigan College Consumer Sentiment, US PPI, Friday

• Citigroup, JPMorgan and Wells Fargo earnings Friday

Possibly the biggest strikes in the markets:

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• S&P 500 futures rose 0.2% as of 1:03 p.m. Tokyo

• Nasdaq 100 futures rose 0.4%

• Japan’s topics rose 1.1%

• Australia’s S&P/ASX 200 rose 0.8%

• Hong Kong’s Dengel Seng fell 0.5%

• Minor changes were made to the Shanghai Composite

• Euro Stoxx 50 futures fell 0.2%

currencies

• Bloomberg dollar spot index made minor changes

• The euro was once marginally revised upwards to $1.0829

• The eastern yen fell 0.1% against the greenback to 161.03.

• The offshore yuan was little changed at 7.2894 against the dollar.

cryptocurrency

• Bitcoin rose 1.7% to $57,207.21

• Ether rose 2.2% to $3,063.7

bond

• The discount on 10-year Treasuries was revised marginally to 4.28%

• Japan’s 10-year yield fell one basis point to 1.075%

• Australia’s 10-year yield fell one basis level to 4.35%

Goods

• West Texas Intermediate crude fell 0.3% to $82.07 a barrel

• Spot gold rose 0.4% to $2,367.97 an ounce.

This story was produced in collaboration with Bloomberg Automation.

–With support from Matthew Burgess and Ivy Chock.

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