The dollar fell and Asia stocks gained on growing speculation the Federal Reserve is close to the end of its tightening cycle after the central bank said any further tightening would be data dependent.
(Bloomberg) — The dollar fell and Asia stocks gained on growing speculation the Federal Reserve is close to the end of its tightening cycle after the central bank said any further tightening would be data dependent.
The commodity-driven New Zealand and Australian dollars strengthened the most against the greenback as traders trimmed bets on further Fed interest-rate increases this year. Major equity indexes advanced across the region, with Hong Kong-listed technology stocks gaining almost 3%.
The dollar is extending losses as the “market has digested the FOMC decision and the opinion is Powell isn’t more hawkish than before, therefore we’re back to the original peak rate expectation and timeline,” said Mingze Wu, a foreign-exchange trader at StoneX Group in Singapore. “S&P futures are climbing, with the dollar weakening as a result.”
There was something for everyone in Fed Chair Jerome Powell’s remarks Wednesday after the Fed hiked its benchmark to a 22-year high, but the market finished the US session betting the next move would possibly be a pause.
Traders and Fed policymakers will also have plenty of US data to examine on Thursday, including GDP, personal consumption expenditures and initial jobless claims.
US stock futures climbed in Asia after the Dow Jones Industrial Average gained for a 13th day Wednesday — the longest winning run since 1987.
Another driver in the US session was a batch of earnings reports, with results from big tech being scrutinized after shares notched a historic advance in the first six months of the year. Facebook parent Meta Platforms Inc. climbed in late trading after projecting revenue that beat estimates, while eBay Inc. fell on a disappointing profit outlook.
XPeng Soars
XPeng Inc. soared more than 30% Thursday, the best performer in MSCI Inc.’s Asia Pacific Index, after Volkswagen AG plans to invest $700 million in the Chinese electric-vehicle maker. Peers Nio Inc. and Li Auto Inc. also gained on the news.
Samsung Electronics Co.’s shares also gained Thursday after the company reported earnings for the second quarter that beat estimates, another signal global tech spending is beginning to recover. Samsung’s results came a day after smaller rival SK Hynix Inc. reported better-than-expected sales.
Treasuries rose with the benchmark 10-year yield dropping one basis point to 3.85%. The yen strengthened for a fourth day as traders await the Bank of Japan’s policy decision Friday and any hint of a shift in its yield-curve control policy.
The current situation in Japan, with inflation running above target and wage growth ticking up, is right for the BOJ to spring the YCC tweak surprise, according to Homin Lee, senior macro strategist at Lombard Odier in Singapore. “It’s going to be a good story for the yen,” he said on Bloomberg Television.
Elsewhere in commodities, oil advanced amid declines in US crude inventories and gold rose for a third day.
Key events this week:
- ECB rate decision, Thursday
- US GDP, durable goods orders, initial jobless claims, wholesale inventories, Thursday
- Japan Tokyo CPI, Friday
- BOJ rate decision, Friday
- Eurozone economic confidence, consumer confidence, Friday
- US consumer income, employment cost index, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 1:18 p.m. Tokyo time. The S&P 500 was little changed
- Nasdaq 100 futures rose 0.7%. The Nasdaq 100 fell 0.4%
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 rose 0.9%
- Hong Kong’s Hang Seng rose 1.4%
- The Shanghai Composite rose 0.4%
- Euro Stoxx 50 futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.1103
- The Japanese yen rose 0.2% to 139.90 per dollar
- The offshore yuan rose 0.3% to 7.1290 per dollar
- The Australian dollar rose 0.8% to $0.6814
Cryptocurrencies
- Bitcoin fell 0.5% to $29,436.33
- Ether fell 0.2% to $1,877.9
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.85%
- Japan’s 10-year yield was unchanged at 0.450%
- Australia’s 10-year yield declined six basis points to 3.95%
Commodities
- West Texas Intermediate crude rose 1.1% to $79.67 a barrel
- Spot gold rose 0.3% to $1,977.74 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Marcus Wong.
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