Lamseen – Asian markets rose slightly on Monday as Japan’s market holiday reduced some recent market volatility. Investors are now focused on upcoming significant economic data from the U.S. and China, which are expected to provide fresh insights into global growth prospects.
A crucial event for the Federal Reserve this week will be the release of U.S. consumer price data on Wednesday. Economists are anticipating a 0.2% increase in both headline and core inflation, with the annual core inflation rate projected to ease slightly to 3.2%.
Analysts at Barclays noted, “This would likely strengthen the Fed’s confidence that disinflation is progressing, which could pave the way for a rate cut in September. However, the core inflation rate still being above the target suggests that a larger 50 basis point cut or an unscheduled rate cut might be unlikely.”
In addition, they expect a robust 0.8% month-on-month increase in headline retail sales, which would indicate continued strength in consumer spending, a key driver of the U.S. economy, supported by solid income and wealth fundamentals.
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Besides retail sales for July, there will be data on industrial output and housing starts, along with several regional manufacturing and consumer sentiment surveys. The futures market currently suggests a 49% probability of the Fed implementing a 50 basis point rate cut in September, down from a certainty of 100% just a week ago, when Japanese equities experienced a sharp decline.
Nikkei futures were trading at 35,535, compared to the cash close of 35,025, though they have not yet returned to the levels before last week’s plunge. The MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6%, led by a 1.6% rise in Taiwan stocks. Chinese blue-chip stocks also edged up by 0.1%.
In Europe, EUROSTOXX 50 futures climbed 0.5% and FTSE futures added 0.4%. In the U.S., S&P 500 and Nasdaq futures were marginally higher in thin trading. So far, around 91% of the S&P 500 companies have reported their earnings, with 78% surpassing market expectations.
This week, earnings reports from Walmart and Home Depot will provide insights into the health of U.S. consumer spending. Meanwhile, China is set to release data on retail sales and industrial production on Thursday. These figures are expect to show that the Chinese economy continues to underperform, highlighting the need for additional stimulus.
In currency of asian markets, the U.S. dollar rose 0.2% to 146.92 yen, recovering from last week’s low of 141.68, while the euro remained steady at $1.0915.
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