Asia shares bounce on China property funds as Fed hike looms

A man wearing a protective mask, amid the outbreak of the coronavirus disease (COVID-19), walks past an electronic board displaying various countries’ stock indices, including the Russian Trading System (RTS) Index which is empty, outside a brokerage house in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon

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  • Chinese stocks rise on reported real estate support
  • Investors expect a Fed hike of 75 bp
  • The markets are now focusing on corporate earnings

HONG KONG, July 26 (Reuters) – Asian shares pared losses on Tuesday as investor sentiment improved on China’s reported plans to tackle a debt crisis in property development.

MSCI’s broadest gauge of Asia shares outside Japan ( .MIAPJ0000PUS ) returned to a 0.36% gain in afternoon sessions. Chinese stocks rose on reports that the country would set up a fund of up to $44 billion to help property developers. read more

Hong Kong’s Hang Seng Index (.HSI) was 1.48% higher and China’s benchmark CSI300 (.CSI300) also extended gains to a gain of 0.91% at the morning close. Japan’s Nikkei (.N225) fell 0.08%, erasing some morning losses.

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FTSE futures rose 0.15 percent. US markets are likely to open lower, with E-mini futures for the S&P 500 down 0.32%.

U.S. retailer Walmart Inc ( WMT.N ) cut its profit forecast on Monday, saying customers were cutting back on discretionary purchases as inflation eats into household budgets. Shares fell 10% after hours. read more

Investors are also awaiting a likely 75 basis point rate hike by the Federal Reserve later this week – with markets pricing in around a 10% risk of a bigger hike, as well as waiting to see if economic warning signs lead to a shift in rhetoric.

“We’re leaning towards the view that 75 bps is most likely, but it won’t be the end unless they see some destruction of demand and some dampening of inflation,” said John Milroy, an investment adviser at Ord Minnett.

“We are afraid that they will have to further slow down the American economy.”

Major technology companies such as Apple ( AAPL.O ), Microsoft ( MSFT.O ) and are due to report earnings this week.

“The market has stabilized” from expectations of rate hikes, said Redmond Wong, Greater China market strategist at Saxo Markets in Hong Kong. – The focus is now on earnings.

In China, “maintaining stability is the key issue,” Wong said of likely outcomes from Politburo meetings expected to begin this week.

In currencies, the dollar was marginally softer but did not drift too far below recent milestones as uncertainty continued to swirl around interest rates and the economic outlook.

The euro rose 0.21% to $1.0240, but was hampered by uncertainty over Europe’s energy security, which is not helped by a looming cut in the westbound flow of Russian gas. read more

The yen stabilized at 136.54 per dollar. The US dollar index, which hit a 20-year high this month, fell slightly to 106.380.

Oil prices rose further on expectations that Russia’s cut in natural gas supplies to Europe could encourage a shift to crude, with Brent futures up 1.27% to $106.45 a barrel and US crude up 1.26% to $97.92 per barrel. read more

Benchmark 10-year Treasury yields fell to 2.875% as growth concerns gave support to bonds.

Gold hovered at $1,721.8 an ounce and bitcoin nursed overnight losses of $21,111.31.

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Reporting by Kane Wu in Hong Kong; Editing by Sam Holmes

Our standards: Thomson Reuters Trust Principles.

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