Asian stocks swing between losses and gains as traders await Chinese data
China trade and lending data and ongoing Sino-US trade tensions counter optimism of a Federal Reserve rate cut
Shanghai — Asian shares veered between small losses and gains on Friday as investors awaited key China trade and lending data, and as worries over Sino-US trade tensions countered optimism rooted in expectations of a Federal Reserve rate cut in July.
Later on Friday, China will release June trade data, with analysts expecting exports to have fallen as weakening global demand and a sharp hike in US tariffs took a heavier toll on the world’s largest trading nation.
China is also due to release lending data on Friday, while second-quarter GDP figures are scheduled for Monday. The world’s second-largest economy is expected to have slowed to its weakest pace in at least 27 years, raising hopes for more stimulus to fend off a sharper slowdown.
“You’ve got key data coming out, and I don’t see why anyone would want to take a position until you’ve got that data,” said Michael Every, head of Asia-Pacific financial markets research at Rabobank in Hong Kong.
“We have a hell of a lot of signal coming through, but until we get the signal, this is noise,” he said.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.1%. Chinese shares rose, with the CSI300 adding 0.7%.
Australian shares dipped 0.1% and Japan’s Nikkei stock index turned higher after small early losses, adding 0.14%.
South Korea’s Kospi was up 0.37%.
Underscoring the economic impact of global trade tensions, Singapore’s economy grew at its slowest pace in a decade in the second quarter as electronics manufacturing output declined for a sixth consecutive month in May, and as exports saw their biggest decline in more than three years.
Amid the global slowdown, US Federal Reserve chair Jerome Powell indicated on Thursday that a rate cut is likely at the Fed’s next meeting.
Bets for such a cut remained strong despite a rise in US consumer inflation in June, and helped to lift the S&P 500 index on Thursday by 0.23% to end at a record closing high of 2,999.91 points.
While the Nasdaq Composite fell 0.08%, the Dow Jones Industrial Average also hit a record high close of 27,088.08 points, rising 0.85% on the day.
S&P 500 e-mini futures were last up 0.24% at 3,011.25.
But a tweet by US President Donald Trump on Thursday in which he said that China was not living up to promises it made on buying agricultural products from American farmers threatened to revive worries over trade.
“Markets have enjoyed a bit of a calm spot in the US-China trade war saga since the announcement of a truce and restarting of trade talks at the G20 meeting. Unfortunately, headlines are once again beginning to emerge,” ANZ analysts wrote in a morning note.
“While this wasn’t a big market mover, it does serve as a reminder that things could flare up again,” they said.
Weak Treasury auction
US Treasury yields had jumped on Thursday after demand was weak for a $16bn 30-year bond auction and after the US labour department said its consumer price index (CPI) excluding food and energy rose 0.3% in June, the biggest increase since January 2018.
The poorly received auction had pushed the 30-year yield as high as 2.672% on Thursday, according to Refinitiv data.
But yields were little changed on Friday. Benchmark 10-year Treasury notes last yielded 2.1291%, up from a US close of 2.12% on Thursday, while the 30-year yield touched 2.646%, up from a close of 2.639%.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, was flat at 1.8524%.
“The CPI report will have no material impact on Fed guidance nor have a significant influence on the great Fed debate around 25 or 50,” said Stephen Innes, managing partner at Vanguard Markets, referring to expectations of the size of a July rate cut.
“After all, the FOMC [Federal Open Market Committee] is unquestionably willing to let inflation run hotter after spending the better part of a decade trying to ignite those flames,” he said.
The dollar fell 0.05% against the yen to 108.43, while the euro gained 0.12% higher to buy $1.1265.
The dollar index, which tracks the greenback against a basket of six major rivals, was down 0.08% at 96.970.
Oil prices picked up as US oil producers in the Gulf of Mexico cut output by more than half in the face of a tropical storm and as tensions in the Middle East remained.
Global benchmark Brent crude gained 0.60% to $66.92 per barrel. US West Texas Intermediate crude was up 0.58% to $60.55 a barrel.
Gold prices, dulled by the stronger-than-expected US consumer inflation data, regained their shine thanks to renewed trade worries and rate cut expectations. Spot gold last traded up 0.28% at $1,407.60/oz.