(Bloomberg) — Stocks in Asia gained following further advances for US stocks and long-dated Treasuries, as investors adjusted to the prospect the Federal Reserve may be done with rate hikes.
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Australian and South Korean equities opened around 1% higher. Contracts for shares in Hong Kong rose while the Golden Dragon index of US-listed Chinese companies climbed 2% Thursday. The S&P 500 advanced 1.9%, its biggest one-day gain since April, and placed the benchmark on track for its best week since November last year. Markets in Japan are closed Friday for a holiday.
US futures ticked lower in early Friday trading following an a decline in after-hours trading in New York for Apple Inc. The iPhone maker reported a fourth quarterly revenue decline as it grapples with a sluggish Mac market and shaky demand in China. Elsewhere, shares in Macquarie Group Ltd were slightly lower after the company reported a drop in earnings.
Long-dated Treasury yields fell Thursday. The 10-year benchmark slipped nearly eight basis points. Australian and New Zealand yields echoed the decline early Friday. Trading in Treasuries in Asia will be closed given the holiday in Japan.
An index of the dollar was flat after weakening Thursday. The yen was also steady after strengthening in the prior session.
UBS anticipates the 10-year Treasury yield to fall to 3.5% by June next year, as the Fed shifts its attention from rate hikes to rate cuts, according to Solita Marcelli, chief investment officer, Americas, for UBS Global Wealth Management. “The improving outlook for a softish landing for the US economy should also provide a positive backdrop for equities,” she said.
Others hold a more cautious view. Hedge fund K2 Asset Management is predicting that benchmark 10-year Treasury yields will rise back to 5% — from 4.66% — while Franklin Templeton says they could peak at 5.25% — a level last seen in 2007. Barclays Plc co-head of global markets Stephen Dainton said it is “very unlikely” the Fed is done tightening policy.
Continuing US jobless claims rose for a sixth straight week, indicating those losing their jobs are starting to have more trouble finding new ones. That data comes ahead of nonfarm payrolls figures due later Friday.
“Friday payrolls will be critical,” said Priya Misra, portfolio manager at JPMorgan Asset Management. “If we get a weak report, rates will continue their move lower, but financial conditions may not loosen further since a recession may look more imminent. A strong report and then the market will watch the Fed nervously to see if they will react.”
In Asia, services industry data for China, set for release Friday, is anticipated to show further expansion. Elsewhere in the region, retail sales data for Australia and Singapore will be released as will purchasing manager index data for India.
Oil edged higher in early Friday trading after a Thursday rally. West Texas Intermediate, the US benchmark, traded above $82 after advancing 2.5% Thursday. Gold was steady. Bitcoin was largely unchanged after jurors delivered a guilty verditct against Sam Bankman-Friend in a criminal fraud case.
Key events this week:
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China Caixin services PMI, Friday
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Eurozone unemployment, Friday
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US unemployment, nonfarm payrolls, Friday
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Canada employment report, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.1% as of 9:12 a.m. Tokyo time. The S&P 500 rose 1.9%
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Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 1.7%
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Hang Seng futures rose 0.9%
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Australia’s S&P/ASX 200 rose 1.1%
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Euro Stoxx 50 futures rose 1.9%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0620
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The Japanese yen was little changed at 150.44 per dollar
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The offshore yuan was little changed at 7.3270 per dollar
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The Australian dollar was little changed at $0.6432
Cryptocurrencies
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Bitcoin was little changed at $34,900.59
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Ether fell 0.1% to $1,802.7
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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