(Bloomberg) — Stocks in Asia headed for a muted open Tuesday and US equity futures inched lower in a sign of further caution among investors weighing the prospect that central banks will have to tighten policy settings more than expected to tame inflation.
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Share futures for Australia and Japan fell slightly while those for Hong Kong stocks edged moderately higher. Contracts for the S&P 500 fell, indicating further downward pressure for US stocks after declines on Thursday and Friday. US equity and bond markets markets were closed for a US holiday Monday.
The dollar was flat, extending a run of range-bound trading over the past week. Treasury futures, which did trade Monday, fell slightly.
Ed Yardeni, chief investment strategist of his eponymous research firm, placed a 40% chance of a soft landing for the US economy, the highest odds among four potential scenarios facing markets this year.
“We see the greatest odds of a soft landing in which inflation moderates, the Treasury bond remains below last year’s peak, and the S&P 500 ends the year at a new high,” he said in a Tuesday note.
Benchmark 10-year yields on New Zealand government bonds rose in early trading Tuesday while Australian yields were flat. The Australian dollar gained 0.5% against the greenback Monday, helped along by a further gain for the price of iron ore, which is at the highest level since June.
BHP, one of the world’s largest iron ore producers, reported a decline in half-year profits Monday alongside higher costs and softer commodity prices, which partly reflected the chill caused by China’s now softened Covid-Zero policy.
The New Zealand dollar strengthened ahead of the Reserve Bank of New Zealand’s rate-setting meeting Wednesday, when the central bank is anticipated to increase the cash rate by 50 basis points to 4.75%. The country is assessing the damage of a destructive cyclone.
Investors will be keeping a close eye on mainland China stocks after the CSI 300 benchmark posted its best one-day gain since November. Goldman Sachs Group Inc. strategists said in a research note Monday prior to the start of trading that the benchmark could surge more than a fifth from current levels this year.
The oil price rose on continuing hopes that China’s reopening will spur activity. Demand from China will climb by 800,000 barrels a day in 2023, according to the median estimate of 11 China-focused consultants surveyed by Bloomberg News. That would take consumption to an all-time high of about 16 million barrels a day, the survey showed.
Investors also awaited clues on US consumer demand as Walmart Inc. and Home Depot Inc. were set to kick off a slew of retail earnings reports this week.
Key events this week:
Earnings for the week are scheduled to include: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, BHP, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, HSBC, Iberdrola, Lloyds Banking Group, Moderna, Munich Re, Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros Discovery
PMIs for Japan, Eurozone, UK, US, Tuesday
US existing home sales, Tuesday
US MBA mortgage applications, Wednesday
The Federal Reserve minutes from Jan. 31-Feb. 1 policy meeting, Wednesday
Eurozone CPI, Thursday
US GDP, initial jobless claims, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
G-20 finance ministers and central bank governors meet in India, Thursday-Friday
Japan CPI, Friday
BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
Some of the main moves in markets as of 7:31 a.m. Tokyo time:
Nikkei 225 futures fell 0.2%
Hang Seng futures rose 0.2%
S&P/ASX 200 futures fell 0.4%
The Bloomberg Dollar Spot Index was little changed
The euro was unchanged at $1.0686
The Japanese yen was little changed at 134.27 per dollar
The offshore yuan was little changed at 6.8598 per dollar
Bitcoin fell 0.2% to $24,728.52
Ether fell 0.2% to $1,698.42
This story was produced with the assistance of Bloomberg Automation.
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