(Bloomberg) — Asian shares edged higher at the open, led by Japanese equities after the country’s gross domestic product beat estimates. Bonds steadied.
MSCI’s gauge of Asian shares rose 0.2% as the Topix Index in Japan gained 0.8%. The country’s economy expanded faster than expected last quarter, avoiding a recession. The yen was little changed. Shares in Australia also advanced.
Bonds held their losses from Thursday after higher inflation data caused traders to pare Federal Reserve interest-rates cuts, sending two-year Treasury yields higher by six basis points to 3.73%. A gauge of the dollar was little changed after gaining 0.4% in the prior session.
Intel Corp. jumped as the US was said to discuss taking a stake in the chipmaker. In late hours, Applied Materials Inc. gave a downbeat forecast. Contracts for the Nasdaq 100 index retreated 0.2% in early Asian trading.
Risk sentiment had been buoyed in previous days by expectations of monetary easing in the US, with traders fully pricing in a quarter-point reduction. But with US wholesale inflation accelerating in July by the most in three years, traders trimmed the odds of a September rate cut to about 90% from near certainty.
“Markets shouldn’t take for granted that rates will be cut deeply because there is an inflation problem in the US,” said Kyle Rodda, a senior market analyst at Capital.com in Melbourne.
Traders in Asia will also focus on China’s monthly data, which will help gauge the health of the economy as it battles a US trade war and the longest deflation streak since at least the 1990s.
Worries of a deepening downturn are mounting, with expectations retail sales growth and industrial production slowed in July from the month prior, according to Bloomberg surveys.
“China’s July activity will probably show signs growth softened heading into the second half,” Chang Shu and David Qu, economists at Bloomberg Economics wrote in a note. While weather was a drag, industrial output was likely “under pressure from the trade war and consumers pulling back further,” they wrote.
Elsewhere, Hon Hai Precision Industry Co. – which assembles Nvidia Corp. servers and Apple Inc. gadgets – expects sales of servers to more than double this quarter while its consumer electronics business dwindles, underscoring how it’s relying on the AI boom to offset volatile iPhone sales.
In commodities, oil clawed back losses in thin trading ahead of Friday’s summit between President Donald Trump and Vladimir Putin. Trump warned he would impose “very severe consequences” if Putin didn’t agree to a ceasefire, following a call with European leaders. Meanwhile, gold slipped on the trimmed-back expectations of a Fed rate cut.
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:09 a.m. Tokyo time Japan’s Topix rose 0.9% Australia’s S&P/ASX 200 rose 0.1% Euro Stoxx 50 futures rose 0.7% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1650 The Japanese yen was little changed at 147.64 per dollar The offshore yuan was little changed at 7.1814 per dollar Cryptocurrencies
Bitcoin rose 0.5% to $118,505.14 Ether rose 0.6% to $4,566.99 Bonds
The yield on 10-year Treasuries was unchanged at 4.28% Japan’s 10-year yield was unchanged at 1.560% Australia’s 10-year yield advanced three basis points to 4.24% Commodities
West Texas Intermediate crude rose 0.1% to $64.04 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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