(Times Of Update) — Stocks in Asia climbed for a second session as markets focused on key U.S. data this week for a better look at the health of the world’s largest economy.
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Stock indexes in the region rose Monday, after rising 1.5 percent on Friday, with benchmarks in Australia, Taiwan and South Korea inching higher. Hong Kong stocks were mixed while mainland stocks were little changed. Japanese markets were closed for a public holiday.
A semblance of calm has returned after markets were wracked early last week by fears that the Federal Reserve was waiting too long to cut interest rates. The Cboe Volatility Index — Wall Street’s gauge of fear — has pulled back from its highest level since the early days of the Covid-19 pandemic. The yen was slightly weaker against the greenback on Monday.
“The skies are not yet completely clear, but several reasons suggest that relatively calmer seas lie ahead,” analysts at Nomura Holdings Inc. said in a note, citing easing fears of a U.S. recession and a lower likelihood of a very aggressive Bank of Japan as reasons for optimism.
The yen surged last week as traders pared bearish bets on the BOJ rate hike, forcing a negative feedback loop as investors unloaded carry trades that ricocheted through markets, before ending last week little changed.
The BOJ and the Fed are the biggest variables driving trade, said Taosha Wang, a portfolio manager at Fil Asia Holdings Pte Ltd. For the U.S., “I don’t think the market is in agreement — either on a recession, which we think is excessive, or a soft landing,” she told Times Of Update Television’s Yvonne Man and David Ingles on Monday.
Elsewhere in Asia, traders will focus on retail sales and industrial production data from China this week to assess whether the country’s economy is regaining momentum.
China continues to battle bond market speculators, with state-owned banks selling debt to prop up yields. Sovereign yields rebounded last week after authorities stepped up their crackdown on bond speculators. The economy needs more stimulus as the latest leading indicators point to a loss of recovery momentum around mid-year, according to Times Of Update Economics.
New Zealand’s central bank is also due to make a decision this week as the New Zealand economy shows signs of entering its third recession in less than two years. Australian and New Zealand government bonds were little changed on Monday. Cash trading in Treasury bills was closed in Asia due to the Tokyo public holiday.
Economic slowdown
A tumultuous week for global bond markets turned calm on Friday as anxiety over a potential U.S. economic slowdown – which triggered a rally in Treasuries and a brief market crash – faded.
The U.S. consumer price index is expected to rise 0.2% from June, both in the headline figure and in the so-called core indicator, which excludes food and energy. But these modest movements may not be enough to sway the Fed from a widely expected decision…
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