Asian stock markets were trying to hold a rare rally on Monday after Wall Street managed a bounce from a deep low, although investors were also braced for bad news from Chinese economic data after the session.
China’s annual retail sales are forecast to fall 6.1%, with industrial production growing by only 0.4%. The new bank’s lending to China is the lowest in almost four-and-a-half years since April.
Bruce Cassman, head of economic research at JPMorgan, said: “The report should highlight the economic losses from the country’s zero-COVID policy – we expect contraction in the manufacturing and demand indicators.”
“After lowering our full-year GDP forecast to 4.3%, the policy response to weakness has remained surprising,” he added. “CNY is doing the job where the PBOC has remained silent despite the recent sharp devaluation.”
Beijing on Sunday allowed mortgage lenders to cut interest rates further for some home buyers, and the central bank was expected to cut its medium-term lending rate by 10 basis points on Monday.
MSCI’s broader index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS strengthened 0.3%, falling 2.7% last week to a two-year low.
Japan’s Nikkei rose 1.2%, losing 2.1% last week and even a weaker yen due to some support from exporters.
S&P 500 stock futures rose another 0.3% in early trade, while Nasdaq futures added 0.6%. Both remain far from last year’s highs, with S&P falling for six consecutive weeks.
Sky-high inflation and rising interest rates sank U.S. consumer confidence to an 11-year low in early May and boosted the partnership for retail sales on Tuesday, April.
A hyper-hawkish Federal Reserve has led to a sharp tightening of the financial situation, with Goldman Sachs lowering its 2022 GDP growth forecast from 2.6% to 2.4%. Growth in 2023 is now seen at 2.6% to 1.6% on an annual basis.
“Our financial position indicator has strengthened by 100 basis points, which should pull in a GDP growth of about 1pp,” said John Hatzius, an economist at Goldman Sachs.
“We expect that the recent tightening of the financial situation will continue, as we expect the Fed to provide what the price will set.”
Futures mean a 50 basis-point increase in both June and July and a rate between 2.5-3.0% by the end of the year, from the current 0.75-1.0%.
Fears that all of this tightening could lead to a recession prompted a rally in Bond last week, which saw the 10-year yield fall 21 basis points from a peak of 3.20%. Early Monday, yields rose in a shadow of 2.94%.
The dollar has risen to a two-decade high as a result of the pullback, though not too much. The dollar index was last at 104.550, and 105.010 within the spit distance of the top.
The euro stood at $ 1.0397, down from সপ্তাহ 1.0348 last week, while the dollar reached 129.44 yen after sinking as deep as 127.54 last week.
In cryptocurrency, Bitcoin last rose 5.1% to, 31,277, reaching its lowest level since December 2020 after the fall of the so-called stablecoin last week.
In the commodity market, gold was under pressure due to high yields and a strong dollar and rose 1.1% to $ 1,810 after falling 3.8% last week.
Oil prices have risen as US gasoline prices hit record highs, China appears poised to ease epidemic restrictions, and investors are worried that the European Union will tighten supplies if Russia bans Russian oil.
Brent LCOc1 was quoted 73 cents higher at 2 112.28, while U.S. crude CLc1 rose 79 cents to 1 111.28.