Asian Stocks Advance Led by Japan on Weaker Yen: Markets Wrap

(Bloomberg) — Asian shares gained to start the fourth quarter, with a weaker yen boosting Japanese indexes.

The Nikkei 225 index rose as much as 1.9%, a day after the benchmark slumped almost 5% following the ruling party’s leadership race. A gauge of Asian equities advanced while Australian shares slipped. China and Hong Kong are closed for holidays. US equity futures inched higher after the S&P 500 rose 0.4% Monday. 

The yen weakened slightly against the dollar on Tuesday after Federal Reserve Chair Jerome Powell said the central bank will lower interest rates “over time,”while re-emphasizing that the overall economy remains on solid footing. Shigeru Ishiba is set to be confirmed as Japan’s new prime minister on Tuesday after the leadership battle wrong-footing investors betting on more monetary stimulus from his rival.

Markets were also bracing for any impact from news that Israel had begun “targeted ground raids” in Lebanon. Oil steadied after a choppy Monday as investors assessed the risks of a wider conflict in the Middle East.

In Australia, retail sales rose more than expected in August as tax cuts and warmer weather encouraged households to spend more. The Aussie led gains among Group-of-10 currencies.

In the US, the S&P 500 secured its fourth consecutive quarter of advances — the longest such winning stretch since 2021. The tech-heavy Nasdaq 100 notched a similar run.  

“The bull market has survived the year’s historically weakest quarter, the third quarter, and it is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending,” said Emily Bowersock Hill at Bowersock Capital Partners.

“We expect the fourth quarter to be quite similar to the third quarter – elevated volatility, but with a strong finish,” she added. 

US bond yields slipped after Powell said the US didn’t have the data yet to make a call on the November meeting.

 

Powell was “a tiny bit hawkish at the margin, but the Fed still has a lot of cutting to do,” according to Vital Knowledge’s Adam Crisafulli. The Fed Chair’s remarks seemed to suggest markets should think about a half-point of reductions instead of three-quarters of a point for the rest of the year, he added.

In other news, Warren Buffett’s Berkshire Hathaway Inc. is planning its second yen bonds sale this year in the global markets, raising speculation it is looking to boost investments in Japan.

Key events this week: 

• Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins speak Tuesday
• ECB policy makers speaking include Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel on Tuesday
• BOE chief economist Huw Pill speaks Tuesday
• South Korea CPI, S&P Global Manufacturing PMI on Wednesday
• Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 11:26 a.m. Tokyo time
• Hang Seng futures fell 2.4%
• Nikkei 225 futures (OSE) rose 1.4%
• Japan’s Topix rose 1.2%
• Australia’s S&P/ASX 200 fell 0.6%
• Euro Stoxx 50 futures rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1140
• The Japanese yen fell 0.2% to 143.85 per dollar
• The offshore yuan was little changed at 7.0035 per dollar

Cryptocurrencies

• Bitcoin fell 0.7% to $63,320.59
• Ether was little changed at $2,614.87

Bonds

• The yield on 10-year Treasuries was little changed at 3.77%
• Japan’s 10-year yield declined one basis point to 0.845%
• Australia’s 10-year yield advanced one basis point to 3.98%

Commodities

• West Texas Intermediate crude rose 0.1% to $68.25 a barrel
• Spot gold rose 0.1% to $2,637.35 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott.

©2024 Bloomberg L.P.