A rally in stocks cooled in Asia on Thursday as investors assessed the corporate profit outlook, while wagers on further Federal Reserve interest-rate hikes supported Treasury yields.

MSCI Inc.’s Asia-Pacific share gauge added about 0.5%, helped by a climb in Chinese tech companies propelled by Alibaba Group Holding Ltd. ahead of its quarterly results. The region’s performance trailed a jump of more than 1.5% in the S&P 500. US futures dipped while European contracts edged up.

Earnings, surprise US service-sector growth and easing jitters over US-China ties propelled Wall Street equities on Wednesday. But a global wave of monetary tightening also hangs over the outlook.

The Bank of England later Thursday is expected to join some 70 other institutions around the world in delivering a half-point rate rise. Federal Reserve officials, meanwhile, again signaled they will do what’s required to cool high inflation even if that raises the risk of recession. 

Treasuries slipped, taking the US 10-year yield to 2.72%, while an inversion in a key part of the yield curve points to an economic slowdown. Oil hovered near $91 a barrel, hampered by demand worries. Gold advanced and Bitcoin oscillated near $23,000.  

Global stocks have now rebounded some 9% from a June low, reducing year-to-date losses to about 15%. The big debate is whether that points to complacency given the bond market is flashing a warning on economic risks.

“The volatility is not over and a lot of data is still out there, it’s still going to matter,” Ann Miletti, head of active equity at Allspring Global Investments, said on Bloomberg Television. “I would still focus on quality here because there is a lot of choppiness to come, a lot of answers we still need.”

US-China tension remains among the uncertainties. Taiwan braced for the Chinese military to start firing in exercises being held around the island in response to US House Speaker Nancy Pelosi’s visit.

This week’s MLIV Pulse survey is asking about your outlook for corporate bonds, mergers and acquisitions and health of US corporate balance sheets through the end of the year. It takes one minute to participate in the MLIV Pulse survey, so please click here to get involved anonymously. 

What to watch this week:

• BOE rate decision, Thursday
• US initial jobless claims, trade, Thursday
• Cleveland Fed President Loretta Mester due to speak, Thursday
• US employment report for July, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were down 0.1% as of 7:01 a.m. in London. The S&P 500 rose 1.6%
• Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 2.7%
• Japan’s Topix index was steady
• South Korea’s Kospi index rose 0.5%
• Hong Kong’s Hang Seng index added 1.7%
• China’s Shanghai Composite index rose 0.4%
• Australia’s S&P/ASX 200 index was steady
• Euro Stoxx 50 futures increased 0.2%

Currencies

• The Bloomberg Dollar Spot Index was steady
• The euro was at $1.0163
• The Japanese yen was at 134.13 per dollar, down 0.2%
• The offshore yuan was at 6.7599 per dollar

Bonds

• The yield on 10-year Treasuries rose two basis points to 2.72%
• Australia’s 10-year yield rose seven basis points to 3.14%

Commodities

• West Texas Intermediate crude was at $90.56 a barrel, down 0.1%
• Gold was at $1,770.51 an ounce, up 0.3%

 

SOURCE :- Bloomberg