Asian equities were primed to rise Tuesday following gains on Wall Street and after China stepped up support for its struggling property market.
Futures for benchmarks in Japan, Hong Kong and Australia rose more than 0.5% while a gauge of US-listed Chinese stocks jumped 1.2%. That suggests bigger moves in the region than Monday’s 0.2% increase for the S&P 500 Index and a marginal move higher for the Nasdaq 100.
Traders in Asia, who have been waiting for more concrete steps from Beijing to bolster its tepid economic recovery, are likely to welcome news that two Chinese regulators stepped up pressure on financial institutions to ease terms for property companies by encouraging negotiations to extend outstanding loans.
Troubles in China’s economy are having wide-ranging impacts on markets, with the chairman of mining giant Rio Tinto Group this week also warning of knock-on effects to demand for industrial metals.
The challenges in China come as many other countries, including the US, contend with a different issue — higher inflation and rising interest rates. In Monday’s session on Wall Street, traders sifted through remarks from a slew of Federal Reserve speakers while awaiting Wednesday’s consumer price index data that will help determine the path for rate hikes.
Three Fed Michael Barr, Mary Daly and Loretta Mester said the central bank will need to raise rates further this year to bring inflation back to its 2% goal.
Market momentum has slowed since equities notched a strong first-half rally as concern resurfaced about the impact of the many economic crosscurrents on corporate profits. Morgan Stanley’s Michael Wilson became the latest to warn that earnings forecasts will matter more than usual this time around given elevated equity valuations, higher interest rates and dwindling liquidity.
Tesla Inc. fell almost 2% and Amazon.com Inc. dropped before its Prime Day event. The Nasdaq 100, which notched a historic first half of a year amid the artificial-intelligence craze, will go through a “special rebalance.” A gauge of big banks pared gains on news about a plan to boost capital requirements.
“Many risks still lie ahead,” said Seema Shah, chief global strategist at Principal Asset Management. “With broad equity valuations having once again become stretched and market breadth extremely narrow, the market is priced for perfection — leaving it vulnerable to earnings disappointments.”
The earnings season kicks off in earnest on Friday, when JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. report their numbers. There’s more pain on the way for the S&P 500 as profit warnings and fears of higher interest rates combine to threaten the key US stock indicator, according to the latest Markets Live Pulse survey.
Key events this week:
- St. Louis Fed President James Bullard speaks, Tuesday.
- Canada rate decision, Wednesday.
- Bank of England Governor Andrew Bailey speaks, Wednesday.
- US CPI, Wednesday.
- Federal Reserve issues Beige Book, Wednesday.
- Fed speakers include Neel Kashkari, Loretta Mester, Raphael Bostic, Wednesday.
- China trade, Thursday.
- Eurozone industrial production, Thursday.
- US initial jobless claims, PPI, Thursday.
- US University of Michigan consumer sentiment, Friday.
- US banks kick off earnings, Friday.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 7:25 a.m. Tokyo time. The S&P 500 rose 0.2%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose less than 0.1%
- Nikkei 225 futures rose 0.7%
- Australia’s S&P/ASX 200 Index futures rose 0.6%
- Hang Seng Index futures rose 0.5%
Currencies
- The euro was unchanged at $1.1001
- The Japanese yen was little changed at 141.23 per dollar
- The offshore yuan was little changed at 7.2299 per dollar
- The Australian dollar was little changed at $0.6678
Cryptocurrencies
- Bitcoin fell 1.5% to $30,316.76
- Ether fell 1% to $1,874.48
Bonds
- The yield on 10-year Treasuries declined seven basis points to 3.99%
Commodities
- West Texas Intermediate crude rose 0.2% to $73.13 a barrel
This story was produced with the assistance of Bloomberg Automation.
