Asian Equities Climb as US Record High Lifts Mood: Markets Wrap

(Bloomberg) — Asian equities rose Thursday after US stocks set a fresh high ahead of inflation data that may help shape Federal Reserve policy easing in the coming months. 

Stocks in China jumped after authorities released details of a liquidity tool institutional investors can use to purchase shares, a measure initially unveiled last month. On Wednesday, a benchmark of mainland equities had suffered its biggest loss in four years.

Treasuries were steady in Asian trading and oil gained while the Bloomberg Dollar Spot Index and the yen were little changed. South Korean bond futures rose following news of inclusion in FTSE Russell’s World Government Bond Index. Indian shares edged higher even as Bernstein cut its equities rating to underweight from neutral.

Chinese stocks are set for further gyrations as investors look to a press conference by the finance ministry on Saturday for clues on stimulus. A 10-day equities rally on the mainland snapped Wednesday after weak economic data from the Golden Week holidays and Beijing’s reluctance to commit to more measures to fuel the rally. 

“Leading into that meeting there is definitely a lot of optimism and hope” around fiscal clarity, said Yuting Shao, macro strategist for State Street Global Markets, on Bloomberg Television. The broader themes of lower US borrowing costs and official support for China’s economy will act as tailwinds for risk sentiment, she added. “Any clarity from China is going to add another layer on top.”

The bar is high for China’s Ministry of Finance to convince the market that its reflation pivot is back on more firmly at the press conference on Saturday, according to Morgan Stanley. 

Louisa Fok, a China equity strategist at Bank of Singapore, said two trillion yuan ($283 billion) of stimulus is “now becoming the consensus,” with probably half of that going to local governments. If a majority of the remainder goes to consumption, it will be positive for markets, she said.

Elsewhere in Asia, Taiwan Semiconductor Manufacturing Co. posted a better-than-expected 39% rise in quarterly revenue on Wednesday. Markets are closed in Taiwan on Thursday. In India, shares of companies in the salt-to-software Tata group were in focus after patriarch Ratan Tata died at the age of 86 in Mumbai. 

US Inflation

US consumer price data to be released later Thursday is expected to show inflation further moderating, supporting the Fed’s anticipated easing in the coming months. Despite this, market pricing indicates the likelihood of another 50 basis point rate cut is all but off the table following last week’s strong jobs report. 

“Policymakers agree inflation is fading and they see potential weakness in job growth,” said David Russell at TradeStation. “That keeps rate cuts on the table if needed. The bottom line is that Powell might have the market’s back headed into the year end.”

Key events this week:

• US CPI, initial jobless claims, Thursday
• Fed’s John Williams and Thomas Barkin speak, Thursday
• JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
• US PPI, University of Michigan consumer sentiment, Friday
• Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 12:44 p.m. Tokyo time
• Nikkei 225 futures (OSE) rose 0.1%
• Japan’s Topix was little changed
• Australia’s S&P/ASX 200 rose 0.3%
• Hong Kong’s Hang Seng rose 4%
• The Shanghai Composite rose 3%
• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0943
• The Japanese yen was little changed at 149.19 per dollar
• The offshore yuan rose 0.3% to 7.0699 per dollar
• The Australian dollar rose 0.2% to $0.6732

Cryptocurrencies

• Bitcoin rose 0.8% to $60,858.58
• Ether rose 1.7% to $2,394.08

Bonds

• The yield on 10-year Treasuries was little changed at 4.07%
• Japan’s 10-year yield advanced 1.5 basis points to 0.945%
• Australia’s 10-year yield advanced two basis points to 4.22%

Commodities

• West Texas Intermediate crude rose 0.8% to $73.82 a barrel
• Spot gold rose 0.2% to $2,612.45 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi, Joanna Ossinger and Masaki Kondo.

©2024 Bloomberg L.P.