Eyes biggest weekly gains in eight months despite tepid S&P500 Futures, yields

• Asia-Pacific equity markets brace for the longest weekly jump since November 2022.
• Hopes of China stimulus, chatters about Fed policy pivot keep sentiment positive in Asia.
• Cautious mood ahead of mid-tier US data prod S&P500 Futures at yearly top, yields dribble at fortnight low.

Market sentiment in the Asia-Pacific region remains bullish during early Friday amid receding fears of hawkish central bank moves, as well as amid hopes of getting more stimulus from the bloc leader China. Adding strength to the optimism were downbeat US data and a light calendar at home. However, the cautious mood ahead of the US consumer-centric data prods the optimists.

While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan rises 0.90% intraday and around 5.5% on a week as it prepares for the biggest weekly gain since November 2022. It’s worth noting that strong Japan Government Bond (JGB) yields and fears of Tokyo’s market intervention prod the Nikkei 225, up 0.20% intraday by the press time.

Australia’s ASX 200 jumps around 0.80% amid news that Michele Bullock will be the next Reserve Bank of Australia (RBA) Governor, starting from September 18, 2023. It’s worth noting that Bullock’s initial comments after the selection were slightly cautious, which in turn suggested challenges for the RBA’s rate hike and favored equity bulls in Canberra.

It’s worth noting that People’s Bank of China (PBoC) Deputy Governor Guoqiang Liu, China’s top diplomat Wang Yi and statements from Beijing’s think tank Chinese Academy of Social Sciences (CASS) flagged concerns about more stimulus from the dragon nation and favored shares in China and surrounding nations.

With this in mind, hawkish comments from the Bank of Korea Governor fail to tame South Korea’s benchmark equity index KOSPI. On the same line, equity indices in India, Indonesia and Hong Kong were also firmer while tracking China amid broad optimism.

In doing so, the optimists ignore S&P500 Futures’ retreat from the yearly top, as well as a pause in the US Treasury bond yields. That said, the US 10-year and two-year Treasury bond yields print mild gains around 3.78% and 4.65% by the press time, after refreshing a two-week low the previous day.

It should be observed that the US Dollar Index remains pressured at the lowest level since April 2022 whereas Gold prices struggle near a one-month high. That said, WTI crude oil eases from the 11-week high as the 200-DMA challenges the Oil bulls.

Looking forward, China headlines and second-tier Japan data will entertain the traders ahead of the preliminary readings of July’s Michigan Consumer Sentiment Index, as well as the Five-Year Consumer Inflation Expectations. In a case where the US data keeps printing downbeat figures, the hopes of witnessing a sooner end to the rate hike cycle will strengthen, which in turn underpin the riskier assets like Gold, equities, AUDUSD, etc.

Also read: Forex Today: Dollar’s downward spiral continues