China to Rally on Reopen; Other Stocks Seen Mixed: Markets Wrap – FinaPress

(Bloomberg) — Asian shares are set for a mixed start after Wall Street slumped on Friday amid signs US inflation is stickier than expected. Chinese stocks are poised for a sturdy open after a week-long holiday.

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Equity futures in Australia and Hong Kong edged higher while contracts in Japan fell after the S&P 500 dropped 0.5% from a fresh record on Thursday. Treasuries fell, with two-year yields up seven basis points to 4.65% on Friday after the producer price index rose on a big jump in costs of services.

Chinese shares will likely be in focus in Asia as they resume trading following the week-long Lunar Recent 12 months break after the central bank held the speed of interest on one-year policy loans at 2.5% while injecting a small amount of cash into the financial system.

Prior to the PBOC’s announcement, buoyant travel and tourism data suggested consumption has revved up similtaneously the broader economy struggles with deflation and a property crisis. The sentiment has helped the benchmark gauge of stocks in Hong Kong rally 3.8% since it reopened on Wednesday while the Nasdaq Golden Dragon Index jumped 4.3% for the week, underscoring room for onshore shares to play catch-up.

“The early read from Chinese Recent 12 months data, from holiday hotel sales to Macau visit numbers, points to vibrant spots in services-related industries,” said Linda Lam, head of equity advisory for North Asia at Union Bancaire Privee. “A-shares should open on a stronger note, continuing the share price recovery on the back of state support,” she said, referring to Chinese stocks traded on the mainland.

Elsewhere, US and global stocks are yet to reply the sell-off in Treasuries this month as a string of better-than-expected economic data drove traders to roll back their once-aggressive rate-cut bets rather a lot that their expectations are literally approaching the Fed’s own 75 basis-point forecast this yr. Swaps are pricing about 90 basis points of rate cuts in 2024 — from greater than 150 basis points initially of February.

Goldman Sachs expects the rally throughout the US to proceed, with the S&P 500 reaching 5,200 by year-end since the resilient US economy drives company profit growth, strategists led by David Kostin wrote in a note to clients. The brand recent goal implies a 3.9% jump from Friday’s close.

UBS Group AG’s wealth management unit also has a positive view on equities once the Federal Reserve starts cutting rates, particularly in small-cap stocks as consumer spending should stay healthy given the strength of the labor market.

“Fed rate cuts are likely still not far off, despite mixed comments from top officials,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management. “While we don’t expect the trail toward lower inflation and lower rates to be smooth, we maintain the view that a soft landing for the US economy favors quality bonds and equities.”

This week, traders will likely be keeping track of European inflation data along with earnings from Nvidia Corp. and mining giants BHP Group and Rio Tinto Plc to help gauge the health of the worldwide economy. Meantime, conflict throughout the Middle East is able to pull on as negotiations aimed toward securing an Israel-Hamas cease-fire and the discharge of hostages haven’t progressed as hoped, Qatar’s foreign minister said.

Just a few of the important thing events this week: