Asian markets brace for global rally

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Asian markets brace for global rally

A global rebound in stocks looks set to support Asian bourses as the trading gets underway Monday ahead of key reports on China's economic activity and liquidity operations by the nation s central bank.

Futures for Japan and Australia went up, but Hong Kong s were steady. After a global share index hit the highest level in over three months, S&P 500 and Nasdaq 100 contracts fluctuated. The dollar was little changed early in Asia.

Equity markets have been attracted to signs of slowing inflation as a result of hopes that the Federal Reserve can swivel towards less aggressive monetary tightening to keep price pressures under control while averting a recession.

The picture is different in the bond market, where a still-steep inversion of the Treasury yield curve points to worries that the Fed will lead to an economic contraction in the campaign to quell inflation.

According to Bloomberg Economics, China's data releases will show its recovery made a bit more headway in July. Last week, low interest rates were failing to spur lending, illustrating challenges from a struggling property sector and Covid-related mobility restrictions.

The People's Bank of China may curb excess banking-system liquidity by withdrawing cash through its medium-term lending facility.

The big question is how long a more than 12% rebound in global stocks from June bear market lows can last?

Kristina Hooper, Invesco's chief global market strategist, said on Bloomberg Television that we are headed in a better direction. It looks like we are past peak for inflation, but the problem is that inflation is still very, very high. Federal Reserve Bank of Richmond President Thomas Barkin said on Friday that the central bank needs to keep raising interest rates until it is clear that inflation is running at its 2% target even if the economy doesn't make a policy mistake similar to the 1970s.

After a US congressional delegation landed in Taiwan on Sunday for a two-day visit, investors are keeping a wary eye on US-China tension.

House Speaker Nancy Pelosi's stopover in Taiwan drew a lot of a response from China, which conducted its most provocative military drills in decades in the wake of her visit.

Some of the biggest moves in markets are:

The offshore currency was at 6.7380 per dollar.