© Reuters. An investor looks at a stock price board at a brokerage office in Beijing, China, January 3, 2020.Reuters/Jason Lee/File Photo
Written by Wayne Cole
SYDNEY (Reuters) – Asian stocks got off to a calm start on Monday as earnings season kicked into gear with Tesla’s (NASDAQ:) earnings release, while markets braced for the significant impact of China’s economic data. became.
China’s economy is forecast to grow just 0.5% in the second quarter, but the annual pace is expected to flatten to a projected 7.3% due to base effects.
With retail sales, industrial production and urban investment all expected to slow, the market expects the Chinese government to announce further stimulus measures soon.
Weekend data showed China’s new home prices were flat in June, the lowest result of the year.
The risk of further bearish results saw MSCI’s broadest index of non-Japanese Asia-Pacific stocks fall 0.2%, following last week’s 5.6% gain.
Futures traded broadly flat but were closed for the holiday.
Nasdaq futures both fell 0.2%, but posted a big gain last week.
Tesla is the first tech giant to report this week, while a busy earnings schedule includes Bank of America (NYSE:), Morgan Stanley (NYSE:), Goldman Sachs (NYSE:), Netflix (NASDAQ:).
U.S. retail sales data show non-auto sales expected to grow by 0.3%, continuing a slowing trend but strong enough to meet the market’s preferred soft-landing theme there is
“While we continue to expect a gradual recession to take hold heading into the end of the year, the path to a non-recessionary disinflation is more likely,” said JP Morgan (NYSE:) economist Michael Ferroli. It’s starting to become a reality,” he said.
“Fed officials expect the recent inflation trend to be welcome, but it would be reckless to declare victory when the unemployment rate is below 4% and core inflation is above 4%.”
Price of policy easing in 2024
As a result, the market still suggests a roughly 96% chance that the Fed will raise rates this month, but only about a 25% chance of another rate hike by November.
It also priced in at least 110 basis points of easing from next March, with two-year yields dropping 18 basis points last week.
This expected policy easing is much more aggressive than that priced in for other advanced economies, which is the main reason for the US dollar turning tail.
The dollar stabilized slightly at 138.75 yen from a bottom of 137.25 yen, following last week’s 2.4% decline. The euro was strong at $1.1223 and climbed 2.4% last week, surpassing the previous year-to-date high of $1.1096.
The pound rose 1.9% last week to hover at $1.3091, with investors anxiously awaiting UK inflation data later in the week, with further high results increasing the risk of even more significant rate hikes. It will be.
It is hovering at 99.989 after dropping 2.2% last week.
Falling bond yields have supported non-yielding gold at $1,952 after having its best week since April. [GOL/]
Oil prices have also been supported by OPEC supply cuts, with oil prices taking profit after three straight weeks of gains. [O/R]
Prices fell 58 cents to $79.29 a barrel early Monday, but fell 55 cents to $74.87.
