Asian stocks rose before a Bank of Japan policy decision and data on China’s economy as a fall in U.S. retail sales fueled bets the Federal Reserve won’t raise interest rates in September.
The MSCI Asia Pacific Index added 0.3 percent to 143.92 as of 9:05 a.m. in Tokyo. Sales at American retailers unexpectedly dropped in June, upending optimism over the strength of a rebound in consumer spending.
Japan’s central bank concludes a two-day meeting Wednesday, with most economists expecting no change in monetary policy. Chinese gross domestic product data is projected to paint a muted picture for the second quarter, with reports on retail sales and factory data also due today.
Growth “has been slow enough that the Fed are obviously going to have to consider pushing off rate hikes until later in the year,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, told Bloomberg TV. His firm oversees more than $25 billion in assets. “We’re telling investors to hold steady and if they’re underweight in equities to do some selective buying.”
Global stocks have rallied for four days amid signs the selloff in Chinese stocks has been tamed and after Greece’s prime minister accepted austerity measures.
E-mini futures on the Standard & Poor’s 500 Index slipped 0.1 percent today after the underlying gauge rose 0.5 percent on Tuesday. The decline in retail sales may push economists to lower second-quarter growth forecasts as consumer spending accounts for about 70 percent of the economy.
The probability of the Fed raising rates at its September meeting slipped to 27 percent, down from 35 percent on Monday, futures data compiled by Bloomberg showed. For December, the odds of a hike fell to 63 percent from 69 percent. Fed officials in June forecast the central bank would raise borrowing costs twice this year.
Japan’s Topix index rose 0.5 percent. With 33 of 35 economists surveyed by Bloomberg seeing no change in the monetary stimulus program that’s already at record size, the focus will be on updated quarterly economic projections, and Governor Haruhiko Kuroda’s press conference.
BOJ officials consider any weakness in the economy to be temporary, and remain confident the longer-term trend toward improvement is intact, people familiar with the matter said earlier this month.
Australia’s S&P/ASX 200 Index added 0.2 percent and New Zealand’s NZX 50 Index rose 0.3 percent. South Korea’s Kospi index gained 0.6 percent. Markets in China and Hong Kong are yet to open.
Courtesy: Bloomberg Business 15 July 2015