Asian stock markets: https://tmsnrt.rs/2zpUAr4
China trims key short term rate
Wall St futures edge up, yields dip as Biden bows out
Earnings season to test lofty tech valuations
US inflation data seen reinforcing case for Sept rate cut
(Adds PBOC rate cut, updates prices)
Asian shares extended recent losses on Monday, getting little lift from a surprise rate cut by China's central bank, while Wall Street futures firmed in the wake President Joe Biden's decision to bow out of the election race.
The People's Bank of China cut short and long-term rates by 10 basis points, saying it was aiming to support growth and pulled bond yields down across the curve.
The move follows Beijing's release of a policy document on Sunday outlining its ambitions for the economy.
"The rate cut is one step in the right direction. I expect more rate cuts to come after the Fed enters a rate cut cycle," said Zhang Zhiwei, president and chief economist of Pinpoint Asset Management.
"The fact that PBOC didn’t wait for the Fed to cut first indicates that the government recognises the downward pressure on China’s economy."
Investors seemed less than inspired by the move and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.2%, having shed 3% last week.
Japan's Nikkei .N225 lost 0.9% and South Korea's benchmark index .KS11 dropped 1.0%.
Chinese blue chips .CSI300 were flat, though they did bounce almost 2% last week.
Investors seemed well-prepared for news President Biden would drop out of the election race and endorse Vice President Kamala Harris for the Democratic ticket.
Online betting site PredictIT showed pricing for a victory by Donald Trump had fallen 4 cents to 60 cents, while Harris climbed 12 cents to 39 cents. California governor Gavin Newsom, another possible Democratic challenger, trailed at 4 cents.
Markets took the news in their stride, with S&P 500 stock futures ESc1 edging up 0.2%, while Nasdaq futures NQc1 added 0.4%. Futures for 10-year Treasuries TYc1 rose 2 ticks, while 10-year bond yields US10YT=RR dipped 1 basis points to 4.23%.
"As Trump's polling results have lifted, markets have favoured positions that anticipate more trade barriers and possibly higher inflation," ANZ analysts said.
"Some polls have Harris performing better than Biden against Trump, and the Democrats will be hoping the next polls feature a Harris-driven bump."
EYE ON EARNINGS A packed week of corporate earnings will see Tesla TSLA.O and Google-parent Alphabet GOOGL.O kick off the season for the "Magnificent Seven" megacap group of stocks.
Others reporting include General Electric GE.N , General Motors GM.N , Ford F.N and Lockheed Martin LMT.N .
The tech sector is projected to increase year-over-year earnings by 17%, while profit for the communication services sector .SPLRCL is seen rising about 22%.
Such gains would outpace the 11% estimated rise for the S&P 500 overall, according to LSEG IBES.
A busy week for economic news will culminate with the Federal Reserve's favoured inflation measure out on Friday. The core personal consumption expenditures index is seen rising 0.1% in June, pulling the annual pace down a tick to 2.5%.
Markets are wagering heavily that a benign outcome will firm the case for a September rate cut, which futures are pricing as a 97% chance. FEDWATCH
Also due are figures for advance gross domestic product that are forecast to show growth picking up to an annualised 1.9% in the second quarter, from 1.4% in the first.
The closely watched Atlanta Fed GDPNow indicator points to growth of 2.7%, suggesting some risk to the upside.
The Bank of Canada meets on Wednesday and is considered almost certain to cut its rates by a quarter point to 4.5%.
In currency markets, the dollar gave back a just a little of last week's safe haven gains as the euro edged up 0.1% to $1.0890 EUR=EBS . The dollar was flat on the Japanese yen at 157.51 JPY=EBS .
In commodity markets, gold held at $2,408 an ounce XAU= and not far from last week's record high of $2,483.60.
Oil prices inched higher, with scant sign of progress on a ceasefire deal in Gaza as Israeli forces battled Palestinian fighters in the southern city of Rafah on Sunday.
Brent LCOc1 gained 43 cents to $83.06 a barrel, while U.S. crude CLc1 rose 55 cents to $80.68 per barrel.
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