MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3%, led by a 1.5% bounce in Taiwan
Share markets were broadly firmer across Asia on Monday as a holiday in Japan removed one source of recent volatility, and investors looked ahead to major U.S. and Chinese economic data for an update on global growth prospects.
Key for the Fed will be U.S. consumer prices on Wednesday where economists look for gains of 0.2% in both the headline and core, with the annual core slowing a bit to 3.2%.
That would likely bolster the Federal Reserve’s confidence that disinflation is ongoing, allowing for a rate cut in September, but a core run-rate still above target should also speak against a larger 50 bp cut or an intra-meeting cut, Barclays analysts said in a note.
Furthermore, we expect a robust 0.8% m/m rise in headline retail sales, pointing to continued resilience in the engine of the economy, the consumer, on the back of solid income and wealth fundamentals, they added.
As well as July retail sales, there is data on industrial output and housing starts, along with several surveys on regional manufacturing and consumer sentiment.
The futures market currently implies a 49% probability of the Federal Reserve cutting by 50 bps in September, though that is down from 100% a week ago when Japanese equities went into free fall.
Nikkei futures traded at 35,570 compared with a cash close of 35,025, though they are not quite back at where they were before last week’s slump.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3%, led by a 1.5% jump in Taiwan. Chinese blue chips held steady.
EUROSTOXX 50 futures gained 0.5% and FTSE futures 0.4%. S&P 500 futures and Nasdaq futures both advanced 0.1% in thin trading. So far, nearly 91% of the S&P 500 companies have reported earnings and 78% of those have beaten the Wall Street estimates.
