- Asian Stock Markets:
- China keeps interest rates unchanged
- Thai baht firms after opposition win
- Biden is set to meet with lawmakers on the debt ceiling Tuesday
- Numerous Fed officials will speak this week
SYDNEY, May 15 (Portal) – Asian equities got off to a cautious start to the week as investors braced for the release of China manufacturing and retail data while waiting for a number of Federal Reserve officials to comment on market pricing for rate cuts in to justify this year .
Both S&P 500 futures and Nasdaq futures fell 0.1% in early trade after a report on Friday showed US consumer sentiment fell to a six-month low in May and long-term inflation expectations to their highest since 2011, buoying the US dollar Treasury yields.
In emerging markets, the Turkish lira slipped to a two-month low after the weekend’s election appeared to be headed for a runoff, while the Thai baht gained nearly 1% after Thailand’s opposition also defeated parties allied with the military in polls over the weekend.
On Monday, MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) varied between gains and losses, and was last up 0.1%. Japan’s Nikkei (.N225) bucked the trend, up 0.5%, building on last week’s optimism during earnings season.
China’s blue-chip index (.CSI300) was flat in early trade after slipping 2% last week, while Hong Kong’s Hang Seng index (.HSI) rose 0.3% after also falling 2 .1% had suffered.
The country’s central bank on Monday extended the maturity of medium-term political loans and left interest rates unchanged, despite disappointing data last week that fueled concerns about a global slowdown.
China will release monthly data on industrial production, retail sales and fixed investment on Tuesday.
“A big year-on-year improvement shouldn’t come as a surprise when measured against a stagnant economy during lockdown,” said Chris Weston, head of research at Pepperstone.
“However, with China’s data raising some concerns recently – we’ve seen poor import, PPI and credit data – China’s growth has been at the center of market moves,” Weston said.
Plenty of Federal Reserve officials are also speaking this week, with Chairman Jerome Powell scheduled for Friday, and could make plenty of headlines to push things even further.
Markets are still expecting this to be the peak in Fed interest rates and are pricing in 70 basis point rate cuts by the end of this year after last week’s CPI and PPI data indicated the case for a Fed pause amid the slowing underpinned inflation.
Fed Governor Michelle Bowman said on Friday that the Federal Reserve will likely have to raise rates further if inflation remains high.
Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, believes persistent US inflation would erase the pricing in of short-term interest rate cuts and help the dollar recover in the coming months.
The US dollar oscillated around a five-week high against its major currencies on Monday, extending its best weekly gain since September from a week ago. Last seen was 102.64 after rising 1.4% last week on global growth concerns.
Uncertainty about the lifting of the US debt ceiling and the return of banking worries kept investors very busy. US President Joe Biden is expected to meet with leaders in Congress on Tuesday for talks to raise the country’s debt limit and avoid a catastrophic default.
Concerns that the US Congress will not raise the debt ceiling in time have led to large distortions at the short end of the yield curve as investors avoid bills that fall due when the Treasury runs out of funds and instead invest in alternative issuance.
The benchmark 10-year bond yield was little changed at 3.4588% after rising 6 basis points on Friday, and the two-year bond yield fell 2 basis points to 3.9830% after also falling in the previous session was up 10 basis points.
Oil prices fell for the fourth straight month. US crude futures were down 0.5% to $69.71 a barrel, while Brent crude futures were down 0.6% to $73.74 a barrel.
Gold prices rose 0.2% to $2,014.95.49 an ounce.
Reporting by Stella Qiu; Edited by Sonali Paul
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