Asian shares climbed on Wednesday following gains on Wall Street as traders bet that the upcoming US consumer price index will show further softening.
(Bloomberg) — Asian shares climbed on Wednesday following gains on Wall Street as traders bet that the upcoming US consumer price index will show further softening.
Equities opened higher in Japan, South Korea and Australia while futures contracts for Hong Kong rose. An index of US-listed Chinese stocks rallied as the S&P 500 moved back above its key 3,900 mark.
Federal Reserve Chair Jerome Powell refrained from commenting on the outlook for monetary policy at an event on Tuesday as investors look to Thursday’s inflation data for any signs of cooling. This could help build the case for the Fed to slow its pace of interest rate hikes, even as some officials say it’s too early to declare victory over inflation.
Treasury yields trimmed the advance they made on Tuesday, with the rate on 10-year debt easing to around 3.6%. Australia’s government bond yields gained after figures Wednesday showed accelerating inflation and higher retail sales. The Australian dollar rose.
A gauge of dollar strength was fractionally lower while still near a seven-month low. The yen steadied in the middle of its range since late December and the offshore yuan was little changed around the strongest level versus the greenback since August.
JPMorgan Chase & Co.’s sales and trading desk expects Thursday’s inflation figures to come in cooler than forecast, helping stocks extend a bear-market rally. The bank’s chief Jamie Dimon told Fox Business that rate hikes might need to go beyond what’s currently expected.
While Powell didn’t directly comment on the Fed’s next steps at a forum in Stockholm, he did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy.” Fed Governor Michelle Bowman said the central bank has more work to do to curb inflation, noting that further tightening is needed.
Meanwhile in Asian markets, much focus is on China and its reopening from Covid curbs. The MSCI Asia Pacific Index slipped slightly on Tuesday after climbing into a bull market on Monday amid hopes for economic growth and weakness in the dollar.
Yet China’s reopening has also triggered a surge of infections and tighter requirements for its citizens to enter many countries. Beijing has begun to hit back against this, suspending some visas for South Korea and Japan.
Key events this week:
- ECB Governing Council members speak at Euromoney conference in Vienna, Wednesday
- US CPI, initial jobless claims, Thursday
- St Louis Fed President James Bullard at Wisconsin Bankers Association virtual event, Thursday
- Richmond Fed President Thomas Barkin speaks at VBA/VA Chamber, Thursday
- China trade, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo report earnings, Friday
This week’s MLIVE Pulse Survey:
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:31 a.m. Tokyo time. The S&P 500 rose 0.7%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.9%
- Japan’s Topix rose 0.8%
- South Korea’s Kospi rose 0.4%
- Australia’s S&P/ASX 200 Index rose 0.7%
- Hang Seng Index futures rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index closed little changed
- The euro rose 0.1% to $1.0740
- The Japanese yen was little changed at 132.23 per dollar
- The Australian dollar rose 0.3% to $0.6910
Cryptocurrencies
- Bitcoin was little changed at $17,453.50
- Ether was little changed at $1,337.39
Bonds
- The yield on 10-year Treasuries fell one basis point to 3.61%
- Australia’s 10-year yield advanced five basis points to 3.76%
Commodities
- West Texas Intermediate crude fell 0.7% to $74.63 a barrel
- Spot gold was at $1,876.28 an ounce
This story was produced with the assistance of Bloomberg Automation.
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