Stocks in Asia are set to follow US equities higher Friday after a rally in tech shares helped investors shake off mixed economic data that suggested a path to a soft landing, but the risk of recession persists.
(Bloomberg) — Stocks in Asia are set to follow US equities higher Friday after a rally in tech shares helped investors shake off mixed economic data that suggested a path to a soft landing, but the risk of recession persists.
Equities rose in Japan, South Korea and Australia, where trading resumed after Thursday’s holiday. Futures for Hong Kong also gained. India’s equity market also reopens after a holiday break, while mainland China remains closed for the Lunar New Year holiday.
The S&P 500 closed at the highest level in more than a month, reflecting a jump in tech stocks. The Nasdaq 100 rose 2% to the highest level since September, led by an 11% gain for Tesla Inc. as Elon Musk teased potential for the carmaker to produce 2 million vehicles this year.
Australian bonds fell in early trading Friday, with 10-year yields rising more than five basis points to 3.56%, following similar moves in US Treasuries. The Aussie held gains from Thursday, while the yen ticked higher after falling 0.5% the day before.
The yen extended gains after Tokyo inflation exceeded estimates. Inflation rose to the highest level since 1981 after last month’s reading was revised down. Quickly rising prices will add pressure on the Bank of Japan to scale back its stimulus after the central bank redoubled its efforts to depress bond yields earlier this month.
Adani Enterprises, which fell in India on Wednesday, is set to publish a response to allegations of fraud from a short seller after the company said on a call with bondholders the claims were “bogus,” according to investors who participated.
The advance for US shares followed mixed economic data. US gross domestic product rose at a faster-than-forecast pace in the December quarter, but there were signs of slowing underlying demand as the steepest rate hikes in decades threaten growth. A surprise drop in initial jobless claims also pointed to resilience in the labor market.
The Federal Reserve is expected to boost rates by 25 basis points next week amid bets the central bank is approaching the end of its tightening cycle. Yet officials are signaling that rates will stay high through the rest of this year.
Thursday’s auction of seven-year Treasury notes ensured that January will be one of the best months ever for US government debt sales. The high demand reflects investor wagers that the Fed is nearing the end of its rate hikes as inflation comes down from its peak.
Analysts’ estimates for 2023 profits continue to fall, with major regions showing negative revision momentum, according to research from Bloomberg Intelligence’s Gina Martin Adams and Gillian Wolff. In the US, for example, sell-side analysts have lowered projections by more than half since September, while the outlook for emerging markets has slumped even more.
In commodities, oil was set to end the week little changed as concerns of an economic slowdown were tempered by optimism over Chinese demand. Gold steadied.
Key events:
- American Express, Charter Communications, Chevron, HCA Healthcare to report results Friday
- US personal income/spending, PCE deflator, University of Michigan consumer sentiment, pending home sales, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 9:06 a.m. Tokyo time. The S&P 500 rose 1.1%
- Nasdaq 100 futures fell 0.5%. The Nasdaq 100 rose 2%
- Japan’s Topix index rose 0.3%
- South Korea’s Kospi index rose 0.2%
- Australia’s S&P/ASX 200 rose 0.3%
- Hong Kong’s Hang Seng futures rose 0.3%%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0896
- The yen rose 0.3% to 129.82 per dollar
- The offshore yuan was little changed at 6.7310 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $23,029.39
- Ether was little changed at $1,604.03
Bonds
- The yield on 10-year Treasuries was little changed at 3.50%
- Australia’s 10-year yield advanced five basis points to 3.56%
Commodities
- West Texas Intermediate crude rose 0.1% to $81.11 a barrel
- Spot gold rose 0.1% to $1,931.21 an ounce
This story was produced with the assistance of Bloomberg Automation.
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