(Times of Update) — Asian stocks edged higher, tracking a rebound on Wall Street, as traders looked to U.S. inflation data due this week for clues about the size of the Federal Reserve’s next interest rate cut.
Times of Update’s most read articles
Tokyo and Sydney stocks posted modest gains after a positive session in U.S. stocks, fueled by fresh dip buying. Seoul stocks were little changed, while mainland Chinese stocks opened lower. Benchmark Treasury yields edged higher while the dollar gained.
The market swings reflect investors’ caution as they seek to balance fears of a U.S. recession with the likelihood of a soft landing. The political uncertainties playing out in the background will be highlighted when former President Donald Trump faces U.S. Vice President Kamala Harris in a debate on Tuesday.
“Markets are wondering whether the Fed can deliver another massive rate cut next week, which is helping the US dollar claw back some of its gains,” said Charu Chanana, head of foreign exchange strategy at Saxo Markets in Singapore. “This week, the focus is also shifting from the economic trajectory to the US election, which should also help the US dollar.”
In Asia, China supporters in the U.S. House of Representatives overcame a last-ditch lobbying effort to pass legislation that would blacklist Chinese biotech companies and their U.S. subsidiaries. The bill now heads to the Senate. Shares of some of the Chinese companies likely to be affected, including Wuxi AppTec and Wuxi Biologics, fell after the bill passed the House.
Alibaba shares rose in Hong Kong after joining the exchange network.
Separately, traders are also awaiting Chinese trade figures, a day after data showed deflationary pressures in the world’s second-largest economy are intensifying.
Iron ore will also be closely watched on Tuesday, having fallen below $90 a tonne in the previous session for the first time since 2022 before closing up 1.1%. Industrial commodities are under sustained pressure from weak Chinese demand and growing concerns about global growth.
On Wednesday, a U.S. government report is expected to show that the consumer price index rose 2.6% in August from a year earlier, according to the median forecast of economists surveyed by Times of Update. That would be the smallest increase since 2021. Fed officials, who are in the traditional blackout period ahead of the Sept. 17-18 meeting, will provide little new guidance.
“Inflation matters,” said Chris Low of FHN Financial. “A weaker reading could encourage the Fed to go for a 50 basis point rate cut, while a deeper cut could allow it to cut by 25 basis points.”
Australian bond yields fell early Tuesday.
Global stocks sold off for the eighth straight week, led by North America, according to a report from Goldman Sachs Group Inc.’s prime brokerage office for the week ended Sept. 6. The move continued a trend that began broadly in May, when funds began liquidating positions in a big way to secure more cash…
