(Bloomberg) — Asian equities were primed to advance on Thursday after US stocks set a fresh high ahead of inflation data that may define Federal Reserve policy easing in the coming months.
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Shares in Australia and equity futures in Japan climbed, helped along by yen weakness on Wednesday, as did those in Hong Kong. An index of US-listed Chinese companies fell in New York trading, following the biggest drop in more than four years for mainland China’s benchmark index on Wednesday.
Few signs of extra support for China’s economy and financial markets appeared, indicating further gyrations for the nation’s equities. A gauge of volatility for Hong Kong stocks was a touch lower Wednesday but remained well above historically averages. One sticking point for investors is whether there will be more fiscal stimulus. Authorities said Wednesday a press conference on the topic will be held over the weekend.
The S&P 500 rose 0.7% to a record high, its 44th of the year, with tech shares again propelling the gains. Apple Inc. climbed 1.7%. Nvidia Corp. halted a five-day rally while Tesla Inc. edged lower ahead of the Robotaxi launch. Alphabet Inc. fell 1.5% on news the US is weighing a Google breakup in a historic big-tech antitrust case.
Gains for tech reflected prior weakness that represented an attractive buying opportunity, according to Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management. “We remain positive on the tech sector as well as the outlook for artificial intelligence,” she said. “We believe volatility should be utilized to build long-term AI exposure.”
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.
Markets barely budged on Wednesday after minutes of the latest Fed gathering, which showed Jerome Powell received some push-back on a half-point rate cut in September, as some officials preferred a smaller reduction.
“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.”
The yield on 10-year Treasuries advanced six basis points to 4.07%on Wednesday. The Bloomberg Dollar Spot Index was steading Thursday after rising 0.4% in the prior session — up for an eighth straight session. The yen was little changed against the greenback after slumping to the lowest level since mid-August to around 149 per dollar on Wednesday.
Inflation Data
The consumer price index is seen rising 0.1% in September, its smallest gain in three months. Compared with a year earlier, the CPI probably rose 2.3%, the sixth-straight slowdown and the tamest since early 2021. The gauge excluding the volatile food and energy categories, which provides a better view of underlying inflation, is projected to rise 0.2% from a month earlier and 3.2% from 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-moving than it had been,” said Matthew Weller at Forex.com and City Index.
“Despite that logical observation, this month’s CPI report may still drive market volatility coming on the back of Friday’s stellar jobs report, a reading that hints at the potential for renewed upside risks to inflation,” he added.
Meanwhile, Fed Bank of San Francisco President Mary Daly said she expects the US central bank will continue lowering interest rates this year in an effort to protect the labor market. “I think that two more cuts this year, or one more cut this year, really spans the range of what is likely,” Daly said Wednesday, referring to one or two quarter-point reductions.
In commodities, oil held steady as US crude inventories swelled and traders monitored China’s plans for fiscal policy. Gold was little changed on Thursday after falling in the previous six sessions.
Key events this week:
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US CPI, initial jobless claims, Thursday
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Fed’s John Williams and Thomas Barkin speak, Thursday
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JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
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US PPI, University of Michigan consumer sentiment, Friday
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Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 8:19 a.m. Tokyo time
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Hang Seng futures rose 2.1%
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Australia’s S&P/ASX 200 rose 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0941
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The Japanese yen was little changed at 149.28 per dollar
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The offshore yuan was little changed at 7.0929 per dollar
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The Australian dollar was little changed at $0.6716
Cryptocurrencies
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Bitcoin rose 0.5% to $60,679.27
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Ether rose 0.6% to $2,368.47
Bonds
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The yield on 10-year Treasuries advanced six basis points to 4.07%
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Japan’s 10-year yield advanced one basis point to 0.930%
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Australia’s 10-year yield advanced three basis points to 4.22%
Commodities
This story was produced with the assistance of Bloomberg Automation.
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