Asian stocks were mixed on Monday as investors weighed up the upcoming Federal Reserve meeting, following the Wall Street rally. best week since November, with US stocks slightly rising on Friday.
US futures rose as oil prices fell.
Japan’s benchmark index fluctuated in morning trading, with the Nikkei 225 losing 15.50 points to 38,047.17 after data showed core machinery orders, used as a leading indicator of capital spending over the next six to nine months, fell 1.7% year on year in June.
The US dollar fell to 146.44 Japanese yen from 147.58 yen.
Last week, better-than-expected U.S. retail sales boosted market confidence and shifted sentiment about possible interest rate cuts by the Federal Reserve in September, which could trigger a selloff in the yen against the dollar and other major currencies. Still, the dollar-yen exchange rate has been on a downward trend in recent weeks.
“The recent turmoil in the currency market is not just about the Bank of Japan’s actions … other factors, such as signals from the Federal Reserve about possible rate cuts, weak US labor market data and broader global economic uncertainties, have also contributed to the recent turmoil,” Luca Santos, currency analyst at ACY Securities, said in a commentary.
Markets are focused on Jackson Hole, Wyoming, where Federal Reserve Chairman Jerome Powell is scheduled to speak later this week. This is an area that has seen major policy announcements in the past.
Because the Fed has said its future moves will depend largely on what data reports say at the time, “it will be difficult for Powell to commit in advance to a particular path in Jackson Hole,” Deutsche Bank economists led by Matthew Luzzetti said.
However, Powell could provide an indication of whether the Fed’s interest rate cuts are simply intended to remove the brakes on the economy or to provide a catalyst.
Elsewhere in Asia, the Australian S&The P/ASX 200 rose 0.2% to 7,988.00 and the Kospi in Seoul lost 0.2% to 2,690.83. Hong Kong’s Hang Seng rose 1% to 17,611.77, while the Shanghai Composite rose 0.5% to 2,894.57.
Bangkok’s SET rose 0.8% after data showed the country’s gross domestic product rose 2.3% in the second quarter from a year earlier, driven by tourism.
Friday is the S&The P 500 rose 0.2 percent to 5,554.25 for a seventh straight gain and fell within 2 percent of its all-time high set last month. The Dow Jones Industrial Average rose 0.2 percent to 40,659.76 and the Nasdaq Composite added 0.2 percent to 17,631.72.
Treasury yields fell in the bond market after mixed reports on the U.S. economy. One report showed homebuilders started fewer projects than expected last month, throwing cold water on the market. Optimism had risen earlier in the week after a flurry of better-than-expected reports on everything from inflation Unpleasant sales at US retailers.
But a report later in the morning suggested American consumers feel better about the economy than expected. That’s a big deal for Wall Street, because their spending accounts for the largest share of the economy.
While confidence in the strength of the economy has increased following the series of positive reports, it is likely to continue to decline under pressure from high interest rates.
The question is whether the growth slowdown will go too far and become a recession. The hope on Wall Street is that an expected cut in interest rates the Fed’s next meeting in September will help prevent this.
In the bond market, the yield on the 10-year Treasury note fell to 3.88% from 3.92% late Thursday. The yield on the two-year Treasury note, which is more in line with expectations for Fed action, fell to 4.05% from 4.10% late Thursday.
In energy trading, benchmark U.S. crude gained 16 cents to $75.38 a barrel. Brent crude, the international standard, lost 15 cents to $79.53 a barrel.
The euro has strengthened against the US dollar, trading at $1.1040 on Monday, up slightly from $1.1028.
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AP Business Writer Stan Choe contributed to this report.