Tokyo and Sydney stocks posted modest gains after a positive session on U.S. stocks, boosted by fresh dip-buying. Seoul stocks were little changed. Benchmark Treasury yields rose while the dollar gained.
Wednesday’s U.S. consumer price report may help shape the outlook for Federal Reserve policy, after traders lowered the chance of a half-percentage point rate cut at the September meeting to around 20%, down from 50% last week. Separately, traders are also awaiting trade figures from China a day after data showed deflationary pressures in the world’s second-largest economy are building.
“Markets are wondering if the Fed can still deliver a massive rate cut next week, and that is helping the US dollar to give back some gains,” said Charu Chanana, head of FX strategy at Saxo Markets in Singapore. “This week, attention is also moving away from the economic trajectory towards the US election and that is likely helping the US dollar as well.”
Australian bond yields fell early on Tuesday.
In Asia, anti-China hawks in the US House of Representatives have defeated a last-ditch lobbying effort to pass a law that would blacklist Chinese biotech companies and their US subsidiaries. The bill now moves to the Senate.
Asian traders will also be keeping a close eye on iron ore on Tuesday, which in the previous session fell below $90 a tonne for the first time since 2022 before closing up 1.1%. Industrial commodities are facing sustained pressure from tepid Chinese demand and growing concerns about global growth.
A U.S. government report on Wednesday is expected to show the consumer price index rose 2.6% in August from a year earlier, according to the median forecast of economists surveyed by Bloomberg. That was the smallest increase since 2021. There will be little new guidance from Fed officials, who are in the traditional period of silence ahead of the Sept. 17-18 meeting.
“Inflation is important,” said Chris Low of FHN Financial. “A weaker number could encourage the Fed to cut by 50 basis points, while anything higher could trigger a 25 basis point cut.”
Global stocks sold off on a net basis for an eighth straight week, led by North America, according to Goldman Sachs Group Inc.’s prime-dealing desk report for the week ended Sept. 6. The move is a continuation of a trend that broadly began in May when funds began unwinding positions in order to get more cash on hand for potential dislocations around the U.S. presidential election.
“Slowdowns do not necessarily herald recessions, nor are stock market corrections necessarily the harbinger of bear markets,” said Konstantinos Venetis of TS Lombard. “But the combination of rising macroeconomic (growth) and political (US election) uncertainty increasingly puts the burden of proof on the bulls in the near term.”
The S&P 500 rose 1.2% after its worst start to a month on record, according to data from Bespoke Investment Group going back to 1953. Nvidia Corp. and Tesla Inc. led gains in megacaps. Apple Inc. unveiled the iPhone 16, with Chief Executive Officer Tim Cook saying it was designed for artificial intelligence “from the ground up.”
Oil held on to a one-day gain as risk appetite returned to broader markets. Gold held on to a small advance as markets await US inflation data. Bitcoin fell below $57,000.
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