Asian equities were mixed before US inflation data for August that may give a better guide on the future path for Federal Reserve interest rates. Oil traded near a 10-month high amid strains in global supplies.
(Bloomberg) — Asian equities were mixed before US inflation data for August that may give a better guide on the future path for Federal Reserve interest rates. Oil traded near a 10-month high amid strains in global supplies.
Stocks climbed in South Korea and Japan, but fell in Australia. Japanese equities were boosted by August producer prices data that came in only slightly below economists’ estimates. Hong Kong stock futures advanced, while those for the US were little changed.
A rout in technology companies dragged down the US stock market Tuesday, with the Nasdaq 100 sliding 1.1%. Apple Inc., which unveiled the iPhone 15 and other products, dropped almost 2%. The S&P 500 fell 0.6%.
West Texas Intermediate traded near a 10-month high set Tuesday as production cuts by leaders of the OPEC+ added to projections for the tightest supply in a decade. The advance sent energy shares higher and added to concern about inflation.
Treasury two-year yields, which are more sensitive to imminent Fed moves, stayed above 5%, while their 10-year peers held at 4.28%. An auction of the US 10-year notes on Tuesday drew the highest yield since 2007 as investors demand increased compensation for elevated inflation and rising US debt issuance.
The dollar inched lower, while the yen and other major currencies traded in narrow ranges.
Wednesday’s consumer-price index is expected to show a pick-up in inflation pressures. Swap traders are currently betting the Fed will stay on hold at a policy meeting next week, and see roughly a 50% chance it delivers a hike in November.
If core inflation comes in at 4.5% annually or higher, this would imply that core inflation remains stickier than hoped, according to Tony Sycamore, a market analyst at IG Australia Pty in Melbourne “The US dollar will fly, and the S&P 500 will board the express train back to the August low 4,350/30 area.”
Meantime, there’s been a “dramatic shift” in investors’ equity allocation — a rush toward the US and an exodus from emerging markets, Bank of America Corp.’s latest global fund manager survey showed.
That’s had an impact on emerging markets equity allocation, which fell to a net 9% overweight in September from 34%, the lowest reading since November 2022. In contrast, allocation to US equities rose 29 percentage points to a net 7% overweight — the first overweight reading since August last year, according to the survey.
Key events this week:
- 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 were little changed as of 9:11 a.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures were little changed. The Nasdaq 100 fell 1.1%
- Japan’s Topix index rose 0.2%
- Australia’s S&P/ASX 200 Index fell 0.3%
- Hong Kong’s Hang Seng futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0762
- The Japanese yen was little changed at 147.18 per dollar
- The offshore yuan was little changed at 7.3018 per dollar
- The Australian dollar was little changed at $0.6430
Cryptocurrencies
- Bitcoin fell 0.9% to $25,847.11
- Ether fell 0.3% to $1,594.44
Bonds
- The yield on 10-year Treasuries was little changed at 4.28%
- 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.
–With assistance from Rita Nazareth.
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