Asia shares mixed shares, China cuts rates as data disappoints

FILE PHOTO – People walk past an electronic screen showing Japan’s Nikkei stock price index at a conference room in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato

SYDNEY, Aug 15 (Reuters) – Asian stocks were mixed on Monday after China’s central bank cut key rates as a slew of economic data missed forecasts and underscored the need for more stimulus to support the second Mondial economy.

Retail sales and industrial production both rose less than expected in July, adding to a disappointing reading on new bank lending.

The rate cut helped cushion the blow a bit and left Chinese blue chips (.CSI300) steady, while yuan and bond yields fell. Read more

“These are further signs that Shanghai’s post-lockdown growth rebound is rapidly weakening,” said Alvin Tan, strategist at RBC. “Monetary policy is losing momentum, except perhaps for the exchange rate, with exports being the only bright spot in the economy.”

MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) was flat, after rebounding 0.9% last week.

Japan’s Nikkei (.N225) rose 1.1%, with data showing the economy grew 2.2% annualized in the second quarter, just slightly below estimates. Read more

Investors remain eager to see if Wall Street can sustain its rally as hopes that US inflation has peaked will be tested by likely hawkish comments from the Federal Reserve this week.

“Wednesday’s FOMC minutes should reinforce the hawkish tone of recent Fed speakers that rates and inflation are far from over,” warned Tapas Strickland, chief economics officer at NAB. .

Markets are still pricing in a roughly 50% chance that the Fed will hike 75 basis points in September and rates will rise to around 3.50-3.75% by the end of the year.

Hopes of a soft economic landing will also be challenged by U.S. retail sales data, which is expected to show a sharp slowdown in spending in July.

There is also a risk of revenue from large retailers, including Walmart (WMT.N) and target (TGT.N)could be accompanied by warnings about a slowdown in demand.

Geopolitical risks remain high with a delegation of US lawmakers in Taiwan for a two-day trip. Read more

EUROSTOXX 50 futures gained 0.4% and FTSE futures rose 0.5%. S&P 500 and Nasdaq futures both fell about 0.2% after last week’s gains.

However, the S&P index is nearly 17% above its mid-June lows and just 11% from all-time highs amid bets on the worst of inflation, at least in the United States.

PEAK INFLATION

“The leading indicators we are seeing support moderation with easing supply pressures, weakening demand, collapsing money supply, lower prices and falling expectations,” BofA analysts said. .

“Major components of headline inflation, including food and energy, are also at an inflection point. Wall Street and Main Street now expect inflation to moderate.”

The bond market still seems to doubt that the Fed can engineer a soft landing, with the yield curve still deeply inverted. Two-year yields at 3.26% are 42 basis points higher than those on 10-year bonds.

These returns supported the US dollar, although it fell 0.8% against a basket of currencies last week as risk sentiment improved.

The euro was holding at $1.0249, having rebounded 0.8% in the past week, although it moved away from resistance around $1.0368. Against the yen, the dollar stabilized at 133.23 after losing 1% last week.

“Our feeling remains that the dollar’s recovery will resume before too long,” said Jonas Goltermann, senior economist at Capital Economics.

“It will take a lot more good inflation news before the Fed changes course. to ‘pivot’.”

The decline in the dollar gave some respite to gold which was holding around $1,794 an ounce, after gaining 1% last week.

Oil prices fell as disappointing data from China added to concerns about global fuel demand.

The chief of the world’s top exporter, Saudi Aramco, said he was ready to increase production as production at several offshore U.S. rigs in the Gulf of Mexico resumed after a brief outage last week.

Brent slid 99 cents to $97.16, while U.S. crude fell 89 cents to $91.20 a barrel.

Reporting by Wayne Cole; Editing by Sam Holmes and Raju Gopalakrishnan

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