US Futures Advance on China Tariff Speculation: Market Overview

(Bloomberg) — Asian stocks looked poised for a solid start Tuesday as investors weighed the possible removal of some U.S. tariffs on Chinese consumer goods.

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Futures rose for Japan and Hong Kong and were steady for Australia. The Biden administration may announce the repeal of some taxes as early as this week to counter high inflation. S&P 500 and Nasdaq 100 contracts also rose.

Reports of the potential move spurred a rally in commodities and risk currencies overnight. A dollar dropped.

The Australian dollar strengthened ahead of the central bank’s interest rate decision. The monetary authority – among more than 80 to have raised rates this year – is expected to implement back-to-back half-percentage-point rate hikes for the first time.

Government bond futures edged lower as European bonds retreated. Crude oil rose to $111 a barrel. Bitcoin retook the $20,000 level.

Speculation has grown that President Joe Biden may reduce some Trump-era tariffs on $300 billion worth of Chinese imports. Policymakers are under pressure to deal with inflation, which has driven interest rates higher, hampered economic expansion and contributed to sharp losses in stocks and fixed income this year.

“US inflation remains extremely high and will require more than fiscal policy to contain price pressures,” Carol Kong, strategist at Commonwealth Bank of Australia, wrote in a note. “We expect the FOMC to continue raising interest rates despite growing recession fears.”

What to watch this week:

  • Interest rate decision in Australia, Tuesday

  • Eurozone PMIs, China, India, among others, Tuesday

  • US factory orders, durable goods, Tuesday

  • FOMC minutes, US PMI, ISM services, JOLTS vacancies, Wednesday

  • EIA crude oil inventories report Thursday

  • Fed Governor Christopher Waller, St. Lewis Fed President James Bullard is scheduled to speak on Thursday

  • ECB report on its June policy meeting, Thursday

  • US employment report for June, Friday

Some of the major moves in the markets:

Stock up

  • S&P 500 futures were up 0.6% at 8:13 a.m. in Tokyo. The S&P 500 rose 1.1% on Friday

  • Nasdaq 100 futures rose 0.9%. The Nasdaq 100 rose 0.7% on Friday

  • Nikkei 225 futures rose 0.3%

  • Australian S&P/ASX 200 futures were little changed

  • Hang Seng futures added 0.6%

Currencies

  • The Bloomberg Dollar Spot Index was down 0.1%

  • The euro was at $1.0434

  • The Japanese yen was 135.84 to the dollar

  • The offshore yuan was 6.6923 to the dollar

Bonds

Goods

  • West Texas Intermediate crude was at $110.53 a barrel, up 2%

  • Gold was at $1,809.68 an ounce, down 0.4%

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