Asian Stocks Gain on China Recovery, Weaker Dollar: Markets Wrap

(Bloomberg) — Asian equities climbed, aided by some encouraging signs in China’s economy and a retreat in the dollar.

Shares in Hong Kong and Australia advanced following data that showed China recorded the highest retail sales growth in eight months and property prices fell at a slower pace. Japanese benchmarks gained about 0.8%, supported by weakness in the yen. US contracts slipped.

A gauge of the dollar halted a five-day gain that was helped by Federal Reserve Chair Jerome Powell’s comments that the central bank will be in no rush to cut interest rates. Friday’s action gives a welcome respite to emerging market assets after they were sold off for most of the week on US President-elect Donald Trump’s cabinet picks and uncertainties over China’s recovery. 

“The strength of the dollar has obviously taken away some of the returns from emerging markets local currency bonds, but we think the more attractive opportunity at this point is in the hard currency aspect of emerging markets,” Salman Niaz, head of global fixed income for APAC ex-Japan at Goldman Sachs Asset Management, said on Bloomberg Television, referring to dollar-denominated debt. “We think a December rate cut is in the cards and we think there will be at least two cuts next year.” 

US two-year yields were little changed after surging on Thursday as traders pared back their expectations for an interest-rate cut in December. 

A gauge of emerging markets equities was on pace for its worst week since June 2022, while a separate index of emerging markets currencies came close to erasing its gains for the year. 

Among key earnings in Asia, Alibaba Group Holding Ltd. reports later Friday after another Chinese consumption bellwether JD.com Inc posted a moderate expansion in revenue. 

China’s retail sales were “pretty good,” and a result of the central bank’s stimulus policy in late September, according to Jason Chan, senior investment strategist for Bank of East Asia. ““Fiscal stimulus is on the way, probably more details would be announced in December.”

Elsewhere, data set for release in the region includes gross-domestic product for Malaysia and Hong Kong. Markets are closed in India.

In commodities, oil headed for a weekly drop, weighed down by the impact of a stronger dollar and concerns the global market will flip to a glut next year. Gold held near a two-month low. 

Resilient Economy

Data earlier Thursday in the US showed producer prices exceeded consensus forecasts. Jobless claims were below expectations and touched the lowest level since May.  

Several policymakers have urged a cautious approach to further rate cuts in comments this week, in light of a strong economy, lingering inflation concerns and broad uncertainty. Their comments come at a time when the equity market is showing signs of fatigue following a post-election surge that spurred calls for a pause, with several measures highlighting “stretched” trader optimism.

In the US, the S&P 500 dropped 0.6%, while the Nasdaq 100 slipped 0.7%. Automakers like Tesla Inc. and Rivian Automotive Inc. slumped as Reuters reported Trump plans to eliminate the $7,500 consumer tax credit for electric-vehicle purchases. Walt Disney Co. jumped on a profit beat. 

Key events this week:

• US retail sales, Empire manufacturing, industrial production, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.3% as of 12:21 p.m. Tokyo time
• Japan’s Topix rose 0.9%
• Australia’s S&P/ASX 200 rose 0.7%
• Hong Kong’s Hang Seng rose 0.5%
• The Shanghai Composite fell 0.5%
• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.1% to $1.0545
• The Japanese yen was little changed at 156.34 per dollar
• The offshore yuan rose 0.2% to 7.2422 per dollar

Cryptocurrencies

• Bitcoin was little changed at $88,301.32
• Ether fell 1.4% to $3,075.65

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.46%
• Japan’s 10-year yield advanced 1.5 basis points to 1.070%
• Australia’s 10-year yield declined six basis points to 4.64%

Commodities

• West Texas Intermediate crude fell 0.7% to $68.25 a barrel
• Spot gold rose 0.1% to $2,568.13 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu.

©2024 Bloomberg L.P.