Stocks edged up in Asia on Thursday amid China’s pledge of more steps to shore up its economy and as traders await a key speech by Federal Reserve Chair Jerome Powell about the policy outlook. Equities in Japan, South Korea and Australia made modest progress, while trading in Hong Kong will be delayed due to a storm. US contracts eked out gains in the wake of positive closes for the S&P 500 and Nasdaq 100. A index of US-listed Chinese shares hit a one-week high on Wednesday, lifted by Beijing’s plan for more steps to shore up an economy stricken by property-sector woes, Covid-linked mobility curbs and some power shortages.
Market anxiety ahead of Powell’s comments is centered on whether he will rebut expectations that slowing growth will temper monetary tightening in the next phase of the campaign against high inflation. Treasuries mostly held a slide against that backdrop, leaving the two-year yield near 3.40%. A dollar gauge drifted lower. Crude oil added to a rally that could feed into renewed jitters about whether price pressures have peaked.
Fed officials in the run-up to Jackson Hole have been clear they see more monetary tightening ahead, a message that’s eroded a bounce in stocks and bonds from mid-June troughs. The tension in markets is whether those assets will continue to head back toward the lows of the year. Powell on Friday has the opportunity to reset expectations of a pivot and even rate cuts in 2023 and “if there’s anything he’s likely to push back against, it’s that — the fact that rates may have to come down” Anastasia Amoroso, the chief investment strategist at iCapital, said on Bloomberg Television.
In Europe, natural gas prices have surged to fresh highs, intensifying an energy crisis that threatens the euro-area economy and hence the global outlook.
What to watch this week
US GDP, initial jobless claims, Thursday
Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
ECB’s July minutes, Thursday
Fed Chair Powell speaks at Jackson Hole, Friday
US personal income, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets
S&P 500 futures rose 0.1% as of 9:26 a.m. in Tokyo. The S&P 500 rose 0.3%
Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.3%
Japan’s Topix index was up 0.1%
South Korea’s Kospi index added 0.5%
Australia’s S&P/ASX 200 index gained 0.5%
Hang Seng index futures rose 0.1% earlier
The Bloomberg Dollar Spot Index fell 0.1%
The euro was at $0.9980, up 0.1%
The Japanese yen traded at 137.01 per dollar, up 0.1%
The offshore yuan was at 6.8701 per dollar, up 0.1%
The yield on 10-year Treasuries was steady at 3.11%
Australia’s 10-year yield climbed six basis points to 3.69%
West Texas Intermediate crude rose 0.5% to $95.39 a barrel
Gold was at $1,752.42 an ounce, up 0.1%