Shares in Asia Advance, Led by Hong Kong Tech: Markets Wrap

(Bloomberg) — Asian stocks advanced led by a rally in Hong Kong technology shares, while hopes of lower US interest rates pushed the region’s currencies to the highest level in five months against the greenback.

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A gauge for Asian shares climbed on Monday, following their best week in over a year. Equity markets in China rose, while an index for Hong Kong tech jumped the most since Aug. 9. Contracts for US equities also climbed. Meanwhile, the Bloomberg Asia Dollar Index gained as much as 0.5%, with the ringgit leading the advance.

Monday’s activity suggests ebbing concerns of a US recession and the prospect of lower borrowing costs are lifting sentiment across the region. The major signpost for the week will be on Friday, when Federal Reserve Chairman Jerome Powell is expected to give fresh insights on the course of US monetary policy at the central bank’s annual confab in Jackson Hole.

“As the recent trading activities are short-term oriented, investors are buying to discount the US rate cut because valuation in Hong Kong looks attractive,” said Steven Leung, executive director at UOB Kay Hian Hong Kong. “Once the cut is confirmed, investors will take short term profits and sell on the good news.”

Goldman Sachs at the weekend trimmed the probability of a US recession in the next year to 20% from 25%, citing last week’s retail sales and jobless claims data. If the August jobs report set for release on Sept. 6 “looks reasonably good, we would probably cut our recession probability back to 15%,” Goldman economists led by Jan Hatzius wrote in a report to clients on Saturday.

Elsewhere in Asia this week, investors will be looking to central bank meetings in Indonesia and South Korea for signs of policy easing, while the Thailand decision will be crucial following reports the nation’s new prime minister may abandon a key stimulus package.

Bank of Japan Governor Kazuo Ueda is scheduled to attend a special session at Japan’s parliament this week to likely discuss the July 31 rate hike, which roiled global markets. Meanwhile, hedge funds have turned bullish on Japan’s currency for the first time since 2021, marking a sharp turnaround from the extremely negative sentiment seen among these traders as recently as early July. The yen was 0.5% stronger against the dollar on Monday.

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In China, authorities are expected to keep the 1- and 5-year loan prime rates steady on Tuesday after the People’s Bank of China last week pledged further steps to support economic recovery, while cautioning that it won’t be adopting “drastic” measures.

Markets will also be monitoring Chinese automakers including Xpeng Inc., Geely Automobile Holdings Ltd. and Xiaomi Corp., who all should report higher vehicle sales. Challenges remain high though, as competition heats up and the European Union moves ahead with tariffs.

Oil declined for the fourth time in five sessions as traders tracked US-led efforts to secure a cease-fire in the 10-month old Middle East, while the Russia-Ukraine war is escalating. Gold wavered near an all-time high on hopes the Fed is edging closer to cutting rates. Elsewhere, iron-ore had its worst week since early June on concern that a steel-industry crisis rippling across China will sap demand, while supplies from miners remain robust.

Here’s what’s coming up:

• US Democratic National Convention takes place Aug. 22, Monday

• Start of annual US-South Korea joint military exercise, Monday

• China loan prime rates, Canada and euro area CPI, Tuesday

• Sweden and Turkey interest rate decisions, Tuesday

• Indonesia and Thailand interest rate decisions, Wednesday

• US FOMC minutes of of July 30-31 policy meeting, BLS preliminary annual payrolls revision, Wednesday

• European Central Bank Governing Council member Fabio Panetta speaks in Rimini, Wednesday

• South Korea central bank rate decision, Thursday

• US Vice President Kamala Harris delivers acceptance speech on the final night of Democratic National Convention, Thursday

• Mexico’s central bank, National Bank of Poland issues monetary policy minutes

• Malaysia CPI data, while Mexico and Norway publish GDP data

• Japan CPI data due, and Bank of Japan Governor Kazuo Ueda to attend special session at Japan’s parliament to discuss July 31 rate hike, Friday

• Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey speak at Kansas City Fed’s annual Jackson Hole symposium, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 12:28 p.m. Tokyo time

• Nikkei 225 futures (OSE) fell 0.6%

• Japan’s Topix was little changed

• Australia’s S&P/ASX 200 rose 0.2%

• Hong Kong’s Hang Seng rose 1.1%

• The Shanghai Composite rose 0.5%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro was little changed at $1.1037

• The Japanese yen rose 0.5% to 146.91 per dollar

• The offshore yuan rose 0.2% to 7.1473 per dollar

• The Australian dollar rose 0.3% to $0.6689

Cryptocurrencies

• Bitcoin fell 1.9% to $58,678.95

• Ether fell 1% to $2,640.19

Bonds

• The yield on 10-year Treasuries was little changed at 3.89%

• Japan’s 10-year yield advanced 2.5 basis points to 0.895%

• Australia’s 10-year yield was little changed at 3.93%

Commodities

• West Texas Intermediate crude fell 0.1% to $76.55 a barrel

• Spot gold fell 0.2% to $2,502.18 an ounce

This story was produced with the assistance of Bloomberg Automation.

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