Stocks look set for a steady start in Asia on Tuesday as investors assess China’s pledge of accelerated stimulus and move to support the yuan. The first OPEC+ supply cut in over a year bolstered crude oil.
(Bloomberg) — Stocks look set for a steady start in Asia on Tuesday as investors assess China’s pledge of accelerated stimulus and move to support the yuan. The first OPEC+ supply cut in over a year bolstered crude oil.
Futures were little changed for Japan and edged up for Australia and Hong Kong. US contracts rose ahead of the resumption of Wall Street trading after a holiday. European stocks fell due to a deepening energy crisis.
China on Monday announced a cut in the amount of foreign-exchange deposits banks must set aside as reserves, a move to aid the nation’s currency after it slid to a two-year low. The offshore yuan was little changed in early trading.
Officials also said they will speed up the roll out of stimulus in the third quarter. Beijing is stepping up support for an economy saddled with Covid lockdowns, a property-sector slump and power shortages.
Crude oil traded around $89 a barrel after OPEC+ agreed to cut 100,000 barrels a day in October. The decision comes amid risks to demand from a wave of monetary tightening in the US, Europe and Asia-Pacific to fight high inflation.
The next rate rise is due in Australia, where economists expect the central bank to lift the policy rate by a further 50 basis points. Tightening financial conditions globally are weighing on stocks and bonds — an Asia-Pacific equity gauge is at a more than two-year low — and stoking demand for the dollar as a haven.
The dollar can find more support if “further negative headlines emerge on Europe’s energy crisis and/or China’s Covid situation,” Carol Kong, strategist at Commonwealth Bank of Australia, wrote in a note.
A dollar gauge edged back but remains in sight of a record level. The pound climbed as markets digested Liz Truss’ victory in the race to succeed Boris Johnson as UK prime minister. The euro also found some relief after sliding to a two-decade low, roiled by Europe’s energy woes.
Bitcoin hovered below the $20,000 level and gold made modest gains.
What to watch this week:
- Australia rate decision, Tuesday
- Apple event due to feature new iPhones, watches, Wednesday
- Bank of England Governor Andrew Bailey at Treasury Committee, Wednesday
- Fed’s Beige Book of regional economic activity, Wednesday
- Cleveland Fed President Loretta Mester due to speak, Wednesday
- European Central Bank rate decision, Thursday
- Fed Chair Jerome Powell speaks at a Cato Institute conference in Washington, Thursday
- Reserve Bank of Australia Governor Philip Lowe speaks at event, Thursday
- China PPI, aggregate financing, money supply, new yuan loans, Friday
- EU energy ministers extraordinary meeting on emergency intervention in electricity markets, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% versus Friday as of 7:28 a.m. in Tokyo. The S&P 500 fell 1.1% on Friday
- Nasdaq 100 futures rose 0.4% versus Friday The Nasdaq 100 fell 1.4% on Friday
- Nikkei 225 futures were little changed
- S&P/ASX 200 futures rose 0.1%
- Hang Seng futures added 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $0.9946, up 0.2%
- The Japanese yen was at 140.51 per dollar, up 0.1%
- The offshore yuan was at 6.9425 per dollar
Bonds
- The US 10-Year Treasury yield was at 3.19% on Friday
Commodities
- West Texas Intermediate crude was at $89.09 a barrel, up 2.6%
- Gold was at $1,711.84 an ounce, up 0.1%
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