Stock rally rolls on as steadier mood lifts crude: markets wrap

Stocks rose in Asia on Wednesday amid speculation that China may deploy more stimulus to shore up its ailing economy and as robust US earnings delivered a boost for investor sentiment.

A jump of over 1% in Japan, along with gains in China and Hong Kong, put MSCI Inc.’s Asia-Pacific share index on course for a more than two-month high. S&P 500 and Nasdaq 100 futures fluctuated while European contracts edged up.

In China, where challenges from a property-sector slump and Covid curbs are multiplying, Premier Li Keqiang asked local officials from six key provinces that account for 40% of the economy to bolster pro-growth measures.

The US stock market posted a small gain on Tuesday, aided by earnings reports from retailers Walmart Inc. and Home Depot Inc. Company profits have encouraged an equity rebound from June lows.

Oil partially bounced from a recent slump but was still in sight of a more than six-month low — reflecting lingering worries about a tough economic outlook amid high inflation and tightening monetary policy.

Treasury yields drifted higher and the dollar was steady. Gold and Bitcoin were both in the green.

The revival in stocks from bear-market lows is partly a bet that inflation and central bank hawkishness are peaking, making a recession less likely. The latest Federal Reserve minutes Wednesday may test those wagers. New Zealand’s half-point interest-rate hike and signal of more to come suggests officials think there’s still work to do to contain price pressures.

“We expect the FOMC minutes to have a hawkish tilt,” Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note. “We would not be surprised if the minutes show the FOMC considered a 100 basis points increase in July.”

The latest US data were patchy. Home construction fell more than expected, while factory output increased in July for the first time in three months.

The stock rebound “could be the beginning of a more durable and gradual rally over 2022 and 2023” if the US avoids a recession, Isaac Poole, global chief investment officer at Oreana Financial Services, said on Bloomberg TV.

Here are some key events to watch this week:

• Federal Reserve July minutes, Wednesday
• UK CPI, US retail sales, Wednesday
• Australia unemployment, Thursday
• U.S. existing home sales, initial jobless claims, Conference Board leading index, Thursday
• Fed’s Esther George, Neel Kashkari speak at separate events, Thursday

Some of the main moves in markets:

Stocks

• S&P 500 futures were steady as of 7:14 a.m. in London. The S&P 500 rose 0.2%
• Nasdaq 100 futures lost 0.1%. The Nasdaq 100 fell 0.2%
• Japan’s Topix index rose 1.3%
• South Korea’s Kospi index slid 0.7%
• Hong Kong’s Hang Seng index climbed 0.8%
• China’s Shanghai Composite index increased 0.4%
• Australia’s S&P/ASX 200 index was up 0.3%
• Euro Stoxx 50 futures gained 0.3%

Currencies

• The Bloomberg Dollar Spot Index was steady
• The euro was at 1.0174 per dollar
• The Japanese yen was at 134.38 per dollar, down 0.1%
• The offshore yuan was at 6.7834 per dollar, up 0.1%

Bonds

• The yield on 10-year Treasuries rose three basis points to 2.83%
• Australia’s 10-year yield rose five basis points to 3.27%

Commodities

• West Texas Intermediate crude rose 1.2% to $87.54 a barrel
• Gold was at $1 779.09 an ounce, up 0.2%