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https://tmsnrt.rs/2zpUAr4 Nikkei rises, S&P 500 futures fall PBOC cuts key rates, China data misses forecasts badly Eyes on Fed minutes, US retail sales, earnings

SYDNEY, Aug 15 (Reuters) – Asian shares were mixed on Monday after China’s central bank cut key lending rates as a raft of economic data missed forecasts and underscored the need for more stimulus to support the second largest economy in the world. Retail sales and industrial production rose less than expected in July, adding to a disappointing estimate of new bank loans. The rate cut helped soften the blow a bit and left Chinese blue chips (.CSI300) flat, while yuan and bond yields slipped. read more Sign up now for FREE unlimited access to Reuters.com Register “These are further signs that Shanghai’s post-lockdown growth recovery is fading fast,” said Alvin Tan, strategist at RBC. “Monetary policy is losing steam outside of possibly the exchange rate with exports being the one bright spot in the economy.” MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) was flat, having rebounded 0.9 percent last week. Japan’s Nikkei (.N225) rose 1.1 percent as data showed the economy grew an annualized 2.2 percent in the second quarter, just a touch short of estimates. read more Investors are still anxious to see if Wall Street can sustain its rally as hopes that US inflation has peaked will be tested by possible hawkish comments from the Federal Reserve this week. “Wednesday’s FOMC minutes should reinforce the hawkish tone from recent Fed speakers that they were not at all on interest rates and inflation,” warned Tapas Strickland, director of finance at NAB. Markets still imply about a 50% chance that the Fed will hike by 75 basis points in September and that interest rates will rise to around 3.50-3.75% by the end of the year. Hopes for a soft economic landing will also get a health check from US retail sales data expected to show a sharp slowdown in spending in July. There is also a risk that gains from major retailers, including Walmart ( WMT.N ) and Target ( TGT.N ), could be accompanied by warnings of a slowdown in demand. Geopolitical risks remain high with a delegation of US lawmakers in Taiwan for a two-day trip. read more EUROSTOXX 50 futures were up 0.4% and FTSE futures were up 0.5%. S&P 500 and Nasdaq futures were down about 0.2% after last week’s gains. But the S&P is nearly 17 percent off its mid-June lows and only 11 percent off its all-time highs, amid bets that the worst of inflation is over, at least in the United States.

RISING INFLATION

“The leading indicators we are watching provide support for containment with easing supply pressures, weakening demand, collapsing money supply, falling prices and falling expectations,” BofA analysts said. “The core components of the inflation metric, including food and energy, are also at an inflection point. Both Wall Street and Main Street now expect inflation to moderate.” The bond market remains skeptical that the Fed can pull off a soft landing, with the yield curve still deeply inverted. The two-year yield at 3.26% is 42 basis points above that of the 10-year bond. Those returns supported the US dollar, although it slipped 0.8% against a basket of currencies last week as the risk climate improved. The euro held steady at $1.0249, having recovered 0.8% in the past week, although it avoided resistance around $1.0368. Against the yen, the dollar was steady at 133.23 after losing 1% last week. “Our sense remains that the dollar’s rally will resume before long,” said Jonas Goltermann, senior economist at Capital Economics. “It will take a lot more good news on inflation before the Fed changes its stance. The minutes from the last FOMC meeting and the Jackson Hole conference may well further push the idea that the Fed is ‘pivoting.’ The dollar’s retreat provided something of a respite for gold, which was holding around $1,794 an ounce, having gained 1% in the past week. Oil prices fell as disappointing data from China added to worries about global fuel demand. The head of the world’s top exporter, Saudi Aramco, said it was ready to raise output as production at several offshore Gulf of Mexico platforms resumed after a brief outage last week. Brent slipped 99 cents to $97.16, while U.S. crude fell 89 cents to $91.20 a barrel. Sign up now for FREE unlimited access to Reuters.com Register Report by Wayne Cole. Editing by Sam Holmes and Raju Gopalakrishnan Our Standards: The Thomson Reuters Trust Principles.