Markets were mixed on Thursday as investors struggled to keep up with Wall Street’s bullish pace, even as fresh data fueled optimism that the Federal Reserve will be able to hold off on raising interest rates further this year.
New York traders cheered news that fewer jobs were created in the US private sector and second-quarter growth was slower than initially thought, suggesting the economy is slowing after more than a year of monetary tightening. Is.
The reading came a day after data on job opportunities and consumer confidence was seen as giving the Fed room to hold back from raising borrowing costs too much.
Investors now see the chances of another bounce this year at less than 50 percent.
The prospect of a less aggressive stance from the US central bank has given equities a much-needed boost this week after suffering a painful August.
The focus is now on Thursday’s release of the US central bank’s favorite gauge of inflation, the personal consumption expenditure (PCE) price index, followed by readings on factory activity and non-farm payrolls for August.
“Investors are reacting with a ‘bad news is good news’ approach,” said Mark Hackett of Nationwide Funds Group, who believe a slowing economy will cause the Federal Reserve to become less aggressive.
However, there are now concerns that the data will continue to come in below forecasts and the economy could slip into recession.
“This has calmed investors, but adds an element of risk if the pendulum continues to swing, as improving earnings is important for a consistently strong market,” Hackett said.
Tokyo, Hong Kong, Sydney, Singapore and Jakarta rose in early trade, but Shanghai, Seoul, Wellington, Taipei and Manila fell.
China revealed on Thursday that factory activity plunged again this month while services weakened, which is likely to increase pressure on authorities to press ahead with measures to restart the faltering economy.
The authorities have announced a number of pledges to help various sectors – particularly the property industry – and it is expected that more will be on the way.
In the latest measure, local reports said on Thursday the central bank was preparing policies that would make it easier for private companies, including developers, to access funding.
However, analysts say the only thing that will please investors is massive, massive spending.
“There remains a wave of optimism about additional policy measures expected from China,” said Stephen Innes of SPI Asset Management.
“Nevertheless, strong economic fears regarding China remain. The current perspective on China’s development trajectory has increasingly focused on the critical policy choices that the Chinese authorities must address.”
The need to provide aid to the beleaguered real estate sector was highlighted on Wednesday after industry giant Country Gardens reported losses of nearly $6.7 billion in the first half of the year and warned of possible default.
The company’s cash flow problems have raised fears that it could collapse and cause unrest in China’s economy and financial system.
A vote by bondholders on extending the repayment terms is due later on Thursday.
– Key Data Around 0230 GMT –
Tokyo – Nikkei 225: up 0.6 percent at 32,517.23 (break)
Hong Kong – Hang Seng Index: up 0.4 at 18,550.29
Shanghai – Composite: down 0.3 at 3,128.11
Dollar/yen: declined to 145.86 yen from 146.23 yen on Thursday
EUR/USD: up from $1.0925 to $1.0928
Pound/dollar: up from $1.2719 to $1.2724
Euro/pound: up from 85.87 pence to 85.89 pence
West Texas Intermediate: Flat at $81.63 a barrel
Brent North Sea crude: flat at $85.85 a barrel
New York – Dow: up 0.1 percent at 34,890.24 (close)
London – FTSE 100: up 0.1 percent at 7,473.67 (close)
Dan/MTP
Source: news.yahoo.com
