Economic news

Asia shares edge higher, wary of Fed words

2022.08.15 04:54

Asia shares edge higher, wary of Fed words
FILE PHOTO – People pass by an electronic screen showing Japan’s Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato

By Wayne Cole

SYDNEY (Reuters) – Asian shares inched higher on Monday with investors anxious to see if Wall Street can sustain its rally as hopes U.S. inflation has peaked will be tested by likely hawkish commentary from the Federal Reserve this week.

“The FOMC Minutes on Wednesday should reinforce the hawkish tones from recent Fed speakers of being nowhere near being done on rates and inflation,” warned Tapas Strickland, a director of economics at NAB.

Markets are still implying around a 50% chance the Fed will hike by 75 basis points in September and that rates will rise to around 3.50-3.75% by the end of the year.

Hopes for a soft economic landing will also get a health check from U.S. retail sales data that is expected to show a sharp slowdown in spending in July.

There is also a risk earnings from major retailers, including Walmart (NYSE:WMT) and Target (NYSE:TGT), could be laced with warnings about a downturn in demand.

Asian markets have to navigate data on China’s retail sales and industrial output for July due later on Monday, which should show some pick up as coronavirus rules were relaxed.

However, figures already out showed new bank lending in China tumbled more than expected in July.

Geopolitical risks also remain high with a delegation of U.S. lawmakers in Taiwan for a two-day trip.

Early Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.1%, having bounced 0.9% last week.

Japan’s Nikkei edged up 0.5% as data showed the economy grew an annualised 2.2% in the second quarter, a touch under estimates.

S&P 500 futures and Nasdaq futures were both down around 0.2%. The S&P index is almost 17% above its mid-June lows and only 11% from all-time highs amid bets the worst of inflation is past, at least in the United States.

PEAK INFLATION

“The leading indicators we observe provide support for moderation with easing supply pressures, weakening demand, collapsing money supply, declining prices and falling expectations,” said analysts at BofA.

“Key components of headline inflation, including food and energy are also at an inflection point. Both Wall Street and Main Street now expect inflation to moderate.”

The bond market still seems to doubt the Fed can manufacture a soft landing, with the yield curve still deeply inverted. Two-year yields at 3.26% are 42 basis points above those for 10-year notes.

Those yields have underpinned the U.S. dollar, though it did slip 0.8% against a basket of currencies last week as risk sentiment improved.

The euro was holding at $1.0259, having bounced 0.8% last week, though it shied away from resistance around $1.0368. Against the yen, the dollar steadied at 133.36 after losing 1% last week. [USD/]

“Our sense remains that the dollar rally will resume before too long,” argued Jonas Goltermann, a senior economist at Capital Economics.

“It will take a lot more good news on inflation before the Fed changes tack. The minutes from the last FOMC meeting and the Jackson Hole conference may well push back further against the notion that the Fed is ‘pivoting’.”

The pullback in the dollar provided something of a reprieve for gold which was up at $1,799 an ounce, having gained 1% last week. [GOL/]

Oil prices eased early on Monday with traders cautious in case progress was made on a possible European-brokered nuclear deal with Iran. [O/R]

Brent slipped 43 cents to $97.72, while U.S. crude fell 36 cents to $91.73 per barrel.

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 76,539.51 1.93%
vested-xor
Vested XOR (VXOR) $ 3,405.08 99,999.99%
ethereum
Ethereum (ETH) $ 2,869.76 7.23%
tether
Tether (USDT) $ 1.00 0.12%
solana
Solana (SOL) $ 196.40 4.99%
bnb
BNB (BNB) $ 600.49 2.35%
usd-coin
USDC (USDC) $ 0.999847 0.08%
xrp
XRP (XRP) $ 0.553923 3.37%
dogecoin
Dogecoin (DOGE) $ 0.195985 1.09%
staked-ether
Lido Staked Ether (STETH) $ 2,869.79 7.24%
cardano
Cardano (ADA) $ 0.392853 10.11%
tron
TRON (TRX) $ 0.160785 1.92%
the-open-network
Toncoin (TON) $ 4.91 3.63%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,398.81 7.99%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 76,410.47 2.02%
shiba-inu
Shiba Inu (SHIB) $ 0.000019 1.78%
avalanche-2
Avalanche (AVAX) $ 27.50 3.60%
weth
WETH (WETH) $ 2,867.25 7.10%
chainlink
Chainlink (LINK) $ 12.49 5.20%
bitcoin-cash
Bitcoin Cash (BCH) $ 384.64 3.34%
sui
Sui (SUI) $ 2.35 3.78%
polkadot
Polkadot (DOT) $ 4.14 1.52%
leo-token
LEO Token (LEO) $ 6.25 0.18%
usds
USDS (USDS) $ 1.00 0.07%
uniswap
Uniswap (UNI) $ 9.09 1.08%
litecoin
Litecoin (LTC) $ 71.90 3.16%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,018.79 7.25%
near
NEAR Protocol (NEAR) $ 4.23 2.10%
aptos
Aptos (APT) $ 9.77 4.54%
pepe
Pepe (PEPE) $ 0.000011 11.01%
bittensor
Bittensor (TAO) $ 515.91 1.33%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.41 0.48%
internet-computer
Internet Computer (ICP) $ 7.73 1.06%
dai
Dai (DAI) $ 0.999758 0.09%
monero
Monero (XMR) $ 166.67 1.87%
ethereum-classic
Ethereum Classic (ETC) $ 20.10 4.45%
kaspa
Kaspa (KAS) $ 0.118578 0.25%
stellar
Stellar (XLM) $ 0.100222 3.95%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.16%
whitebit
WhiteBIT Coin (WBT) $ 19.47 0.77%
aave
Aave (AAVE) $ 186.00 9.38%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.344929 4.46%
blockstack
Stacks (STX) $ 1.68 0.16%
crypto-com-chain
Cronos (CRO) $ 0.092328 9.60%
okb
OKB (OKB) $ 40.34 3.26%
dogwifcoin
dogwifhat (WIF) $ 2.38 0.97%
first-digital-usd
First Digital USD (FDUSD) $ 1.00 0.08%
arbitrum
Arbitrum (ARB) $ 0.579885 9.38%
mantle
Mantle (MNT) $ 0.672365 13.61%
filecoin
Filecoin (FIL) $ 3.75 2.98%