Asian Equities Muted as US Shares Rise on GDP Data: Markets Wrap
Asian equities were primed for a muted open after US stocks hit a fresh high, helped along by data that showed a robust economy ahead of the Federal Reserve ’s favored price gauge due Friday.
Contracts for Japanese equity index futures were little changed while those for Chinese benchmarks climbed. The rose 0.3% to a record Thursday while the gained 0.6%. pared losses as several analysts their price targets despite an uninspiring forecast. US futures were little changed in early Asian trading Friday.
Data Thursday showed the US economy than initially estimated, highlighting the resilience of consumer spending. While that soothed recession jitters, it raised doubts about inflation, with Friday’s report expected to show core personal consumption expenditures prices rising 2.9% in July, the fastest pace in five months.
“In-line or lower results will likely cement investors’ confidence in a September rate cut,” said Bret Kenwell at eToro. “While a higher-than-expected print may not take a rate cut off the table next month, it could sour Wall Street’s mood as inflation concerns grow.”
Treasuries mostly rallied Thursday except for short-dated US government bonds. The policy-sensitive two-year yield rose two basis points to 3.63%. Swap contracts continued to fully price in a quarter-point Fed cut this year by October and a second one by year-end. About 20 basis points of easing are priced in for September.
The yen held Thursday gains on the greenback in early Asian trading. An of the dollar fell 0.3% Thursday.
Elsewhere, earnings are set to land on Friday. A price war in China’s is hurting the country’s e-commerce giants, including
Meanwhile, the European Union said it has adopted to remove all tariffs on US industrial goods and give preferential treatment to some US agricultural and seafood products.
Oil retreated early Friday after rising Thursday as the of a peace agreement between Russia and Ukraine reduced the likelihood of more of Moscow’s supplies reaching broader markets in the near term.
Federal Governor Lisa Cook’s lawyers suggested that an unintentional “ ” may have been behind the mortgage dispute over which President Donald Trump wants her fired.
US Economy
Inflation-adjusted gross domestic product, which measures the value of goods and services produced in the US, increased at a 3.3% annualized pace in the second quarter. That compared with an initially reported 3% increase.
“The economy appears to be on all cylinders, and it should be a boost of confidence to markets that most of the tariff-angst was misplaced earlier this year,” said Chris Zaccarelli at Northlight Asset Management. “However, markets have already priced in a September rate cut, and it is important that the inflation data remains restrained between now and then.”
While the latest GDP report provides a bit more clarity, the focus remains on the delicate balance between elevated inflation and a softening labor market, according to Jim Baird at Plante Moran Financial Advisors.
Baird noted that Fed Chair Jerome Powell threw an additional lifeline of hope to investors looking for a September rate cut at his Jackson Hole speech last week. Whether policymakers will deliver additional easing in the months that follow is less certain.
“Powell’s acknowledgment of the growing risk to the job market appears to open the door to additional rate cuts even though most measures of inflation remain above the central bank’s comfort zone,” Baird said.
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This story was produced with the assistance of Bloomberg Automation.
