Stocks Up Amid China Stimulus, Countdown to Powell: Markets Wrap

(Bloomberg) — An Asian stock index rose Thursday as China’s latest steps to shore up its economy steadied some nerves in the anxious wait for a key speech by Federal Reserve Chair Jerome Powell at the Jackson Hole meeting.

Most Read from Bloomberg

The regional gauge increased about 1%, paced by Hong Kong after a delayed start to trading there due to a storm. US and European futures pushed higher in the wake of positive closes for the S&P 500 and Nasdaq 100.

China stepped up stimulus with a further 1 trillion yuan ($146 billion) of measures for an economy stricken by property-sector woes, Covid-linked mobility curbs and some power shortages. Mainland share gains lagged, suggesting uncertainty about whether the efforts are sufficient.

Angst ahead of Powell’s comments due Friday is centered on whether he will rebut expectations that slowing growth will temper US monetary tightening in the next phase of the campaign against high inflation.

Treasuries held a slide and the two-year yield remained in sight of 3.40%. A dollar gauge dipped. Crude oil added to a rally that could feed into renewed jitters about whether price pressures have peaked.

Fed officials in the run-up to Jackson Hole have been clear they see more monetary tightening ahead, a message that’s eroded a bounce in stocks and bonds from mid-June troughs. The tension in markets is whether those assets will continue to head back toward the lows of the year.

“The market is really trying to justify a bear market rally and is looking for that dovish pivot from the Fed and it’s unlikely to get that,” Mehvish Ayub, senior investment strategist at State Street Global Advisors, said on Bloomberg Television. “We have to continue to expect this volatility, not just ahead of Jackson Hole, ahead of any sort of narrative from Fed officials.”

Story continues

South Korea’s central bank raised borrowing costs and projected faster inflation. The won and bond yields advanced. The currency led an Asian basket tracked by Bloomberg.

In Europe, natural gas prices have surged to fresh highs, intensifying an energy crisis that threatens the euro-area economy and hence the global outlook.

Will the meme mania fizzle out? That’s the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.

What to watch this week:

• US GDP, initial jobless claims, Thursday

• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday

• ECB’s July minutes, Thursday

• Fed Chair Powell speaks at Jackson Hole, Friday

• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 7:00 a.m. in London. The S&P 500 rose 0.3%

• Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 0.3%

• Japan’s Topix index was up 0.5%

• South Korea’s Kospi index added 1%

• Australia’s S&P/ASX 200 index gained 0.7%

• China’s Shanghai Composite Index climbed 0.2%

• Hong Kong’s Hang Seng Index surged 1.6%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro was at $0.9992, up 0.3%

• The Japanese yen traded at 136.71 per dollar, up 0.3%

• The offshore yuan was at 6.8584 per dollar, up 0.3%

Bonds

Commodities

• West Texas Intermediate crude rose 0.4% to $95.25 a barrel

• Gold was at $1,756.92 an ounce, up 0.3%

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.