Asian stocks are expected to track Wall Street higher as several Federal Reserve policymakers hinted at further easing and optimism grew that China will announce economic stimulus measures.
Futures indexes in Tokyo and Hong Kong pointed to gains of at least 1%, while Sydney shares were flat to down. U.S. stock futures were down slightly after stocks barely rose on Monday, with the S&P 500 up 0.3%, just shy of last week’s all-time high.
Data released on Monday showed that U.S. business activity slowed slightly in early September while expectations worsened and the received prices index rose to a six-month high, bolstering confidence that the world’s largest economy can achieve a soft landing.
“This is a somewhat inconclusive report and therefore doesn’t dramatically change Fed expectations,” said Adam Crisafulli of Vital Knowledge. “The preliminary PMIs suggest that the U.S. economy is in pretty healthy shape, especially compared to Europe.”
Investors are now awaiting the release of the Fed’s preferred price gauge and data on U.S. consumer spending later this week.
In Asia, speculation is growing that the Chinese government will step up efforts to revive economic growth. Officials said Monday that People’s Bank of China Governor Pan Gongsheng would hold a press conference on Tuesday to discuss fiscal support for economic development. Minutes later, the central bank cut its 14-day reverse repurchase rate, catching up with cuts it began in July.
The moves strengthened expectations that the People’s Bank of China would cut interest rates after a series of disappointing data in August raised concerns that the government may miss its annual growth target of around 5 percent without further support measures.
In the United States, traders are betting on almost three-quarters of a percentage point of policy easing by the end of the year, suggesting at least one more big rate cut is on the way. Wall Street and policymakers alike are awaiting Friday’s jobs report for further clues on the direction of the economy.
Chicago Fed President Austan Goolsbee said that with inflation approaching the central bank’s target, the focus should shift to the labor market, “which will probably mean more rate cuts over the next 12 months.”
Minneapolis Fed President Neel Kashkari also cited weakness in the job market and said he supports another half-percentage point cut by the end of the year. Atlanta Fed President Raphael Bostic struck a more moderate tone. He said starting the central bank’s rate-cutting cycle with a bigger cut would help move rates closer to neutral, but officials shouldn’t commit to another big round of rate cuts.
Yields on policy-sensitive two-year Treasury notes fell to 3.58 percent, while longer-dated Treasuries were little changed. Treasuries had been under pressure as the Treasury plans to frontload a $183 billion auction and issue up to $25 billion in new corporate bonds this week.
Wall Street strategist Ed Yardeni warned the central bank that last week’s bold rate cuts risked a resurgence in inflation if the central bank doesn’t tread carefully. The Fed is ignoring the upcoming presidential election, where both candidates have proposed policies that could provoke inflation, he added.
Gold hit a fresh record high on Monday as the worsening Middle East conflict spurred expectations that the metal’s safe haven value would drive prices higher. Oil was slightly higher at the open on Tuesday.
Australia is expected to remain an outlier in its monetary easing cycle on Tuesday, with economists expecting the Reserve Bank of Australia to keep interest rates unchanged at a 12-year high of 4.35% and keep them there until at least February.
Apollo Global Management LLC has offered to invest billions of dollars in Intel Corp. as a vote of confidence in the chipmaker’s turnaround strategy, according to people familiar with the matter.
Boeing has offered its largest labor union a 30 percent pay raise in an effort to break a stalemate that has halted plane production across the Pacific Northwest.
Brookfield Asset Management raised an initial $2.4 billion for a fund focused on investing in clean energy and transition assets in emerging markets, about halfway to its target.
Palantir Technologies co-founder and CEO Alex Karp has a love-hate relationship with Wall Street: He says analysts don’t understand the company and he prefers the group of retail investors loyal to Palantir.
StandardAero Inc. is seeking to raise $1.1 billion in an initial public offering after its backer, The Carlyle Group, decided to pursue a public listing rather than a sale of the aircraft maintenance services provider.
Some of the key market developments:
This story was produced with assistance from Bloomberg Automation.
This article has been generated from an automated news agency feed without any modifications to the text.
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