Asian Stocks to Rally as US Record High Lifts Mood: Markets Wrap

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(Bloomberg) — Asian stocks are poised to advance Thursday after U.S. stocks hit a new high ahead of inflation data that could determine the Federal Reserve’s policy easing in the coming months.

Stock futures rose in Japan, supported by a weaker yen on Wednesday, as did Australia and Hong Kong. An index of Chinese companies listed in the United States fell in New York trading, after the largest decline in more than four years for the benchmark index on the Chinese mainland on Wednesday.

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There have been few signs of additional support for the Chinese economy and financial markets, indicating more volatility in Chinese stocks. A measure of volatility in Hong Kong stocks fell on Wednesday but remained well above historical averages. One sticking point for investors is whether there will be more fiscal stimulus. Authorities said on Wednesday that a press conference on the matter will be held over the weekend.

The Standard & Poor’s 500 rose 0.7% to its 44th record high this year, with technology stocks adding to gains again. Apple shares rose 1.7%. Nvidia Corp halted a five-day rally while Tesla Inc fell. Before launching Robotaxi. Alphabet stock fell 1.5% on news that the United States is considering breaking up Google in a landmark Big Tech antitrust case.

Technology’s gains reversed earlier weakness that represents an attractive buying opportunity, according to Soletta Marcelli, chief investment officer for the Americas at UBS Global Wealth Management. “We remain positive about the technology sector as well as the outlook for artificial intelligence,” she said. “We believe volatility should be used to build exposure to AI over the long term.”

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US consumer price data due later on Thursday is expected to show inflation moderating further, supporting expected easing from the Federal Reserve in the coming months. However, market prices indicate that another 50 basis point rate cut is unlikely after last week’s strong jobs report.

Markets barely moved on Wednesday after minutes from the Federal Reserve’s latest meeting showed Jerome Powell taking some pushback on a half-point interest rate cut in September, with some officials favoring a smaller cut.

“Policymakers agree that inflation is fading and see potential weakness in job growth,” TradeStation’s David Russell said. “This keeps interest rate cuts on the table if necessary. The bottom line is that Powell may restore market balance through the end of the year.

The yield on the 10-year Treasury note rose six basis points to 4.07% on Wednesday. The Bloomberg Dollar Spot Index rose 0.4% — rising for the eighth straight session. The yen rose early Thursday against the dollar after falling to its lowest level since mid-August to around 149 yen to the dollar.

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The price of oil stabilized as US crude inventories swelled and traders monitored China’s fiscal policy plans.

Inflation data

The CPI is expected to rise 0.1% in September, its lowest rise in three months. Compared with the previous year, the CPI likely rose 2.3%, the sixth straight slowdown and the weakest since early 2021. The measure that excludes volatile food and energy categories, which provides a better view of core inflation, is expected to rise 0.2%. compared to the previous month and 3.2% as of September 2023.

“The Fed’s decision to shift its focus from inflation to the labor market means that inflation data, including tomorrow’s CPI, is likely to become less market-impacting than it was before,” said Matthew Wheeler of Forex.com and City Index. .

He added: “Despite this common-sense observation, this month’s CPI report may still lead to market volatility on the back of Friday’s stellar jobs report, a reading that points to the potential for renewed upside risks to inflation.”

Main events this week:

• US Consumer Price Index, Initial Jobless Claims, Thursday
• The Fed’s John Williams and Thomas Barkin speak on Thursday
• JPMorgan and Wells Fargo kick off earnings season for Wall Street’s big banks on Friday
• US Producer Price Index, University of Michigan Consumer Confidence, Friday
• The Fed’s Lori Logan, Austin Goolsby and Michelle Bowman speak on Friday

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Some key movements in the markets:

Stocks

• S&P 500 futures were down 0.1% as of 7:15 a.m. Tokyo time.
• Hang Seng futures rose 2.1%
• S&P/ASX 200 futures rose 0.4%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%.
• There was little change in the euro at $1.0938
• There was little change in the Japanese yen at 149.27 to the dollar
• There was little change in the yuan in external transactions at 7.0926 to the dollar
• There was little change in the Australian dollar at 0.6712 US dollars

Cryptocurrencies

• Bitcoin rose 0.6% to $60,768.03
• Ethereum rose 0.9% to $2,375.75

Goods

• West Texas Intermediate crude rose 0.2% to $73.41 a barrel
• There was little change in spot gold

This story was produced with assistance from Bloomberg Automation.

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