Business

Asia Stocks Rise on China and Fed Outlook Hopes: Markets Wrap

September 4, 2023

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(Bloomberg) — Asian stocks rose on optimism in China’s property sector and on expectations the Federal Reserve is nearing the end of its tightening cycle.

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Hong Kong benchmark indexes outperformed the region as investors resumed trading after a closure on Friday. Property stocks extended their advance, with China’s property shares gauge rising above 3% on the government’s fresh measures in the sector. Stocks also gained in Japan and Australia. A regional equity benchmark advanced for a sixth day to the highest close since mid-August.

Distressed Chinese builder Country Garden Holdings Co. won approval from creditors over the weekend to extend a maturing yuan bond. Its shares jumped.

Futures for US equities steadied after the S&P 500 Index eked out a gain Friday to notch its best week since June. Tesla Inc. dropped over 5%, while energy shares rallied as oil topped $85 a barrel. US markets are shut Monday for the Labor Day holiday.

West Texas Intermediate climbed for an eighth straight day Monday and headed for the highest close since November on expectations that supply cuts by OPEC+ leaders will tighten the market. Brent inched closer toward $90.

Friday’s US jobs report showed a labor market undergoing a controlled cooling, illustrated by solid hiring, slower earnings growth and more people returning to the workforce. The moderation gives the Fed room to pause rate increases this month while keeping options open for another hike later in the year.

The dollar steadied after gaining Friday against major peers. There is no trading of cash Treasuries due to the US holiday.

In Asia, China’s trade and inflation data this week will likely signal that the economy’s recovery remains fragile, keeping pressure on policymakers to roll out more stimulus.

Global demand for Chinese goods is still weak, as reflected by the depressed level of manufacturing gauges in the country’s main export markets. And an ongoing slump in the property market is curbing China’s import demand for building materials.

Meanwhile, as softer economic data weigh on Treasury yields, stock market participants seem willing to bid valuations back up on the view that the late-cycle environment is being extended once again, according to Morgan Stanley’s Mike Wilson.

“With inadequate evidence to affirm or contradict that view, price remains the governing factor for many investors’ conclusions about where we are in the cycle,” he wrote in a note. “We continue to recommend a more defensive growth posture in one’s portfolio given that growth fears or financial stress could return at any moment in a late-cycle environment, particularly as we enter September.”

Elsewhere, gold was little changed. Key rate decisions for central banks are scheduled in Australia and Malaysia this week with rates expected to remain on hold.

Key events this week:

Labor Day holiday in US and Canada, Monday
ECB President Christine Lagarde makes speech at seminar organized by the European Economics & Financial Center, Monday
Australia current account, rate decision, Tuesday
Japan household spending, Tuesday
China Caixin services PMI, Tuesday
Eurozone S&P Global Eurozone Services PMI, PPI, Tuesday
US factory orders, Tuesday
ECB President Christine Lagarde chairs panel focused on central banks and international sanctions at ECB Legal Conference, Tuesday
Australia GDP, Wednesday
Eurozone retail sales, Wednesday
Germany factory orders, Wednesday
US trade, Wednesday
Canada rate decision, Wednesday
Bank of England Governor Andrew Bailey testifies to the UK parliament’s Treasury Select Committee, Wednesday
Federal Reserve issues Beige Book economic survey based on reports from Fed’s 12 district banks, Wednesday
Boston Fed President Susan Collins speaks on the economy at New England Council in Boston, Wednesday
Dallas Fed President Lorie Logan at community listening session to explore economic issues facing the Lubbock area, Wednesday
China trade, forex reserves, Thursday
Eurozone GDP, Thursday
US initial jobless claims, Thursday
Bank of Canada Governor Tiff Macklem to speak on the Economic Progress Report in Calgary, Thursday
New York Fed President John Williams participates in moderated discussion at the Bloomberg Market Forum, Thursday
Atlanta Fed President Raphael Bostic speaks on economic outlook at Broward College in Davie, Florida, Thursday
Japan GDP, Friday
France industrial production, Friday
Germany CPI, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 10:56 a.m. Tokyo time. The S&P 500 rose 0.2% on Friday
Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.1%
Japan’s Topix rose 0.6%
Australia’s S&P/ASX 200 rose 0.5%
Hong Kong’s Hang Seng rose 1.2%
The Shanghai Composite rose 0.4%
Euro Stoxx 50 futures rose 0.2%