Business spending declined 0.4 percent from the previous three months (estimate +0.2 percent), according to the data released by the Cabinet Office on Monday. The Dow, S&P 500 and Nasdaq all made record closing highs last week for the first time since 1999.
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US IN FOCUS: Investors will look ahead to USA reports due for inflation, manufacturing and housing.
“Our sense is that we’re still in this Goldilocks period where it’s a sweet spot for equities and that will not change probably until the next rate hike”, said Mike Bailey, director of research at FBB Capital Partners.
Australia’s benchmark S&P/ASX 200 is 0.3% lower while New Zealand stocks are trading flat.
In February, the central bank began charging retail banks on excess reserves, implementing a negative interest policy in its quest to get lenders to put money to use. The “minutes are likely to highlight that while the door was left open for a September rate move, this was anything but a commitment”, said Marc Ostwald, analyst at ADM Investor Services.
But looking past the boost from tourism and government spending, Shatil said the economy was still somewhat fragile which could indicate the possibility of “further monetary easing from the central bank”.
The jump in USA equities helped underpin markets in London (.FTSE) and Frankfurt (.GDAXI), which added to gains and were up 0.36 percent and 0.24 percent respectively.
It was up 0.4 percent at $1,340 an ounce and is now up 25 percent since the start of the year. China stood out in Asia as the blue-chip CSI300 Index jumped 3.3 percent to a seven-month high amid speculation more stimulus would be forthcoming from Beijing after a raft of weaker-than-expected July data.
The minimal growth comes on the heels of a revised 2-percent growth logged in the January-March quarter and highlights the issues the government is having in actualizing economic policies to reverse two decades of deflation and reinvigorate corporate and private spending, against a backdrop of a persistently strong yen, which continues to hamper the nation’s key export sector, as prior and recent stimulus efforts seem to be ineffectual.
MSCI’s all-world equity index .MIWD00000PUS rose 0.2 percent.
The same fundamentals should also underpin bonds.
As of 10:37 BST the dollar/yen cross was 0.38% lower at 100.91. It has climbed 14 percent since June when Britain’s vote to leave the European Union unleashed a new wave of global policy stimulus, led by aggressive action from the Bank of England.
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Asian stocks recouped losses incurred early on Monday after a rally in Chinese stocks helped offset news of Japan’s economic growth slowing to a halt last quarter. In Japan, the Topix index slipped 0.2 per cent amid trading volumes nearly 40 per cent below the 30-day average.
