Asian stocks edged higher after Wall Street rose ahead of key US data that’s expected to show how close the Federal Reserve is from ending its rate hikes.
(Bloomberg) — Asian stocks edged higher after Wall Street rose ahead of key US data that’s expected to show how close the Federal Reserve is from ending its rate hikes.
Benchmark indexes advanced at the open in Japan and South Korea, while futures for Hong Kong signaled a decline when trading starts. US stock futures were marginally lower after tech shares led the way forward Monday with the Nasdaq 100 rising 1.2%. Tesla Inc. rallied 10% as Morgan Stanley said its Dojo supercomputer may boost value by up to $500 billion. Qualcomm Inc. climbed after Apple Inc. extended a deal with the chipmaker.
The greenback steadied after falling by the most in two months as the region’s biggest central banks took aim in different ways at its recent rally. The yen slightly weakened following the strong advance in the previous session. Treasuries were little changed in Asia trading.
Bitcoin rose after dropping to the lowest since June on Monday, as the world’s largest digital token formed a so-called death cross pattern — in which the 50-day moving average falls below its 200-day marker. Such a crossover typically signals a loss of short-term momentum and further selling pressure ahead.
The Japanese government will face another test of demand in the bond market with a five-year auction Tuesday, the first sale since central bank Governor Kazuo Ueda jolted markets with comments on the negative interest rate policy. The yield on the ten-year benchmark bond rose half a basis point to 0.71% in early trading.
While Ueda’s comment excited the markets, the big catalyst has yet to arrive, according to Chris Weston, head of research at Pepperstone Group Ltd.
“Wages are the core consideration for the BOJ, but we won’t get the outcome of the spring wage negotiations until April 2024,” he wrote in a note. “So realistically, the big catalyst won’t be seen for a while, and any changes in rate setting won’t happen for about six months, although the market lives in the future and will front-run these expectations.”
Hopes for China’s recovery remain the focus in Asia amid fresh signs on Monday that the world’s second-biggest economy may finally be starting to improve. Deflationary pressures eased and the yuan rallied, while strong credit data showed recent steps to bolster the real estate market may be starting to lift household demand for mortgages.
Stable
In the US, consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York survey. The consumer-price index report Wednesday will provide the latest insight into how much further the Fed may need to go to pull inflation back toward its target.
“This week is more likely to be a ‘good news is good, bad news is bad’ story,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. “The market’s ability to rebound in the near term could hinge on this week’s inflation numbers, especially Wednesday’s CPI.”
Meanwhile, some 26% of respondents in the latest MLIV Pulse survey say they plan to decrease their exposure to the US equity benchmark over the next month. That’s double the amount of those who plan to buy. Only 13% of respondents said they might expand their exposure.
In commodities, oil steadied near its highs of the year after rallying about 10% in recent weeks, with technical indicators that suggest its gains may be overdone sapping the benefit of risk-on sentiment in broader markets. Energy-market watchers will also be keeping a close eye on Australia, after Chevron Corp. said it’s applying to a labor regulator to help resolve its dispute with unions at liquefied natural gas sites as workers continue partial strikes.
Key events this week:
- Germany ZEW survey expectations, Tuesday
- UK jobless claims, unemployment, Tuesday
- Apple set to unveil iPhone 15 line and next-generation smartwatches at “Wonderlust,” its biggest product-upgrade event of the year, Tuesday
- Japan PPI, Wednesday
- Eurozone industrial production, Wednesday
- UK industrial production, Wednesday
- US CPI, Wednesday
- Tech leaders including Tesla’s Elon Musk and Meta Platforms’ Mark Zuckerberg are set to attend a forum on the future of AI convened by Senator Chuck Schumer, Wednesday
- Japan industrial production, Thursday
- European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
- US retail sales, PPI, business inventories, initial jobless claims, Thursday
- China property prices, retail sales, industrial production, Friday
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 9:19 a.m. Tokyo time. The S&P 500 rose 0.7%
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 1.2%
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 fell 0.1%
- Euro Stoxx 50 futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0745
- The Japanese yen was little changed at 146.70 per dollar
- The offshore yuan was little changed at 7.3029 per dollar
- The Australian dollar was little changed at $0.6425
Cryptocurrencies
- Bitcoin rose 0.3% to $25,158.5
- Ether rose 0.6% to $1,550.49
Bonds
- The yield on 10-year Treasuries was little changed at 4.29%
- Japan’s 10-year yield was unchanged at 0.710%
- Australia’s 10-year yield was little changed at 4.17%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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