Asian Stocks Mixed Before US Inflation, Oil Drops: Markets Wrap

Inflation-adjusted gross domestic product, which measures the value of goods and services produced in the US, increased at a 3.3% annualized pace in the second quarter. That compared with an initially reported 3% increase.

“The economy appears to be on all cylinders, and it should be a boost of confidence to markets that most of the tariff-angst was misplaced earlier this year,” said Chris Zaccarelli at Northlight Asset Management. “However, markets have already priced in a September rate cut, and it is important that the inflation data remains restrained between now and then.”

While the latest GDP report provides a bit more clarity, the focus remains on the delicate balance between elevated inflation and a softening labor market, according to Jim Baird at Plante Moran Financial Advisors. 

Baird noted that Fed Chair Jerome Powell threw an additional lifeline of hope to investors looking for a September rate cut at his Jackson Hole speech last week. Whether policymakers will deliver additional easing in the months that follow is less certain.

“Powell’s acknowledgment of the growing risk to the job market appears to open the door to additional rate cuts even though most measures of inflation remain above the central bank’s comfort zone,” Baird said.

The policy-sensitive two-year yield rose two basis points to 3.63%. Swap contracts continued to fully price in a quarter-point Fed cut this year by October and a second one by year-end. About 20 basis points of easing are priced in for September.

In commodities, oil gave up some of its gains in the prior session amid waning hopes for peace in Ukraine, which reduced the likelihood of more of Moscow’s supplies reaching broader markets in the near term.

The commodity is headed for a monthly loss, as investors weighed concerns about a looming glut along with geopolitical tensions, including US-led efforts to end the war in Ukraine.

A meeting between Ukrainian President Volodymyr Zelenskiy and Russia’s Vladimir Putin is unlikely to materialize, according to German Chancellor Friedrich Merz, even though it was touted earlier by US President Donald Trump. Trump will make a statement on Russia and Ukraine later, the White House said.

Meanwhile, the European Union said it has adopted draft regulations to remove all tariffs on US industrial goods and give preferential treatment to some US agricultural and seafood products. 

Separately, Fed Governor Lisa Cook’s lawyers suggested that an unintentional “clerical eroor” may have been behind the mortgage dispute over which President Donald Trump wants her fired. 

Stocks

• S&P 500 futures were little changed as of 9:27 a.m. Tokyo time

• Hang Seng futures rose 0.8%

• Japan’s Topix fell 0.4%

• Australia’s S&P/ASX 200 fell 0.3%

• Euro Stoxx 50 futures were unchanged

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1675

• The Japanese yen was little changed at 146.96 per dollar

• The offshore yuan was little changed at 7.1196 per dollar

• The Australian dollar was little changed at $0.6533

Cryptocurrencies

• Bitcoin rose 0.4% to $112,375.25

• Ether rose 0.8% to $4,493.79

Bonds

• The yield on 10-year Treasuries was little changed at 4.21%

• Japan’s 10-year yield was little changed at 1.615%

• Australia’s 10-year yield was little changed at 4.28%

Commodities

• West Texas Intermediate crude fell 0.5% to $64.25 a barrel

• Spot gold was little changed