South Korea’s benchmark index fell. Mainland China and Hong Kong shares were little changed, as were those in Australia. Treasuries were also steady in Asian trading.
US stock futures were marginally lower after tech shares led the way forward Monday, with the Nasdaq 100 rising 1.2%. Tesla Inc. rallied 10% as Morgan Stanley said its Dojo supercomputer may boost the company’s value by up to $500 billion. Qualcomm Inc. climbed after Apple Inc. extended a deal with the chipmaker.
Holders of yuan bonds issued by Sino-Ocean Capital earlier rejected a motion to extend the principal and interest payment, a further signal that investors’ sentiment remains bleak in the nation’s real estate sector despite recent support measures by the authorities. Meanwhile, Country Garden won approval from its creditors to extend the repayments on six onshore bonds by three years, Reuters reports, citing two unidentified people.
In currencies, the PBOC set its daily fixing rate at below 7.20 versus the dollar, a sign that it won’t tolerate excessive yuan weakness. The greenback steadied after falling by the most in two months and the yen slightly weakened following a strong advance in the previous session.
Bitcoin rose after dropping to the lowest since June on Monday, as the world’s largest digital token formed a so-called death cross pattern — in which the 50-day moving average falls below its 200-day marker. Such a crossover typically signals a loss of short-term momentum and further selling pressure ahead.
The Japanese government will face another test of demand in the bond market with a five-year auction on Tuesday, the first sale since central bank Governor Kazuo Ueda jolted markets with comments on the negative interest rate policy. The yield on the 10-year benchmark bond rose 1.5 basis points to 0.72% in Asian trading.
While Ueda’s comment excited the markets, the big catalyst has yet to arrive, according to Chris Weston, head of research at Pepperstone Group Ltd.
“Wages are the core consideration for the BOJ, but we won’t get the outcome of the spring wage negotiations until April 2024,” he wrote in a note. “So realistically, the big catalyst won’t be seen for a while, and any changes in rate setting won’t happen for about six months, although the market lives in the future and will front-run these expectations.”
Stable
In the US, consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York survey.
The consumer-price index report on Wednesday will provide the latest insight into how much further the Fed may need to go to pull inflation back toward its target. Monthly inflation is expected to accelerate to 0.6% in August, while core is seen stable at 0.2%, according to economists’ estimates.
“If we do see potentially a more sticky inflation number than the 0.6% expected by economists or 0.2% on core, I would expect to see the bond market start to potentially price in another rate hike before the end of the year, potentially as early as November,” Anthony Doyle, head of investment strategy at Firetrail Investments Pty Ltd, said on Bloomberg Television.
Meanwhile, some 26% of respondents in the latest MLIV Pulse survey say they plan to decrease their exposure to the S&P 500 over the next month. That’s double the amount of those who plan to buy. Only 13% of respondents said they might increase exposure.
In commodities, oil steadied near its highs of the year after rallying about 10% in recent weeks, with technical indicators that suggest its gains may be overdone sapping the benefit of risk-on sentiment in broader markets. Energy-market watchers will also be keeping a close eye on Australia, after Chevron Corp. said it’s applying to a labor regulator to help resolve its dispute with unions at liquefied natural gas sites as workers continue partial strikes.
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