Asia Stocks Set to Follow US Gains on Fed Outlook: Markets Wrap
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2023-08-31 07:25
Shares in Asia are poised to follow Wall Street gains after US economic reports pointed to slowing growth,

Shares in Asia are poised to follow Wall Street gains after US economic reports pointed to slowing growth, adding to bets the Federal Reserve is nearing the end of its tightening cycle.

Equity futures for Japan, Australia and Hong Kong all rose. The S&P 500 advanced for a fourth day Wednesday, extending this week’s gains to 2.5%. The tech-heavy Nasdaq 100 has climbed 3.5% this week.

Treasury yields edged lower across the curve after US gross domestic product rose at a 2.1% annualized pace in the second quarter, lower than the government’s previous estimate. An industry gauge of employment showed fewer jobs were added than economists forecast, while a measure of consumer confidence was also softer than expected.

The underwhelming numbers supported predictions for the Fed to ease back on interest-rate hikes. Swap contracts are now pricing in less than a 50% chance of another quarter-point increase this year.

“Investors are reacting with a ‘bad news is good news’ approach, betting that a slowing economy will lead to a less aggressive Federal Reserve,” said Mark Hackett, chief of investment research at Nationwide Funds Group. “This has calmed investors, but adds an element of risk if the pendulum continues to swing, as an earnings recovery is critical for a continued strong market.”

In China, investors are focused on official purchasing managers index data due Thursday that is forecast to show further weakness in manufacturing and slowing growth in services.

Additional signs of official support for the world’s second largest economy emerged on Wednesday. The People’s Bank of China is drafting preliminary policies to give private businesses better access to funding, local media reported.

Elsewhere, Country Garden Holdings Co. signaled it may default on its debt after the embattled Chinese developer posted a record first-half loss of almost $7 billion.

In US corporate news, Apple is testing the use of 3D printers to produce smartwatch components, according to people with knowledge of the matter. US prosecutors are investigated a Tesla Inc. plan to purchase hard-to-get construction materials. Visa Inc. and Mastercard Inc. shares rose on plans to boost the fees charged to retailers.

The price of oil clung to gains in early Asian trading after ending Wednesday with its fifth daily advance. Gold edged higher after a string of gains this week. Bitcoin traded above $27,000.

Key events this week:

Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Rita Nazareth.

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