Stocks in Asia are recovering from early losses on Tuesday as economic data revealed a surprising slowdown in the U.S. services sector, adding to expectations that the Federal Reserve would not raise interest rates at its meeting next week.
The S&P/ASX 200 in Australia was down 0.62% as of 9:36 AM Bangkok time, before the country’s central bank rate decision. According to a Reuters poll, the Reserve Bank of Australia is likely to keep rates unchanged at 3.85%.
The Nikkei 225 in Japan added 0.15%.
The Hang Seng in Hong Kong gained 1.26%, while the Shanghai Composite rose 0.4% on the mainland.
South Korea’s markets are closed Tuesday for a holiday.
U.S. indices dropped overnight, with the S&P 500 down 0.2% and the Nasdaq Composite down 0.09%. The Dow Jones fell by 0.59%.
The electronics giant Apple fell by 0.8%, down from all-time highs touched earlier in the session. On Monday, at its annual Worldwide Developers Conference, the iPhone maker introduced its highly awaited virtual reality headset and a host of software updates.
Monday’s data suggested that the U.S. services sector barely expanded in May, as new orders slowed. This pushed a measure of prices paid by businesses for inputs to a three-year low, which might benefit the Federal Reserve in battling against inflation.
Bets on the Fed not raising interest rates at its June 13-14 meeting have been buoyed by a slew of economic statistics and last week’s dovish language from Fed members.
According to the CME FedWatch tool, the odds of the Fed keeping rates unchanged have risen sharply in the past week, from 36% to 77%.
