Shares advanced in Asia following a rally on Wall Street as investors position for US inflation data later Tuesday that might not be as bad as once feared.
(Bloomberg) — Shares advanced in Asia following a rally on Wall Street as investors position for US inflation data later Tuesday that might not be as bad as once feared.
Stocks climbed in Australia, South Korea and and Japan, where the Nikkei index jumped more than 1% at open. Futures for Hong Kong ticked higher and an index of US-listed Chinese stocks jumped the most in almost two weeks.
The S&P 500 added 1.1% and the tech-heavy Nasdaq 100 climbed 1.6% after a survey showed Americans drastically reduced their expectations for household income growth amid tighter monetary policy.
Investors will also be focused on the nomination of the next Bank of Japan governor as bets increase that yield-curve control may be abolished soon under the new leadership of Kazuo Ueda. The benchmark 10-year yield is sitting hard against the BOJ’s 0.5% ceiling.
The yen, which has appreciated steeply since late October, was little changed in early trading on Tuesday. Japan’s economy returned to growth in the three months through December, but while consumption recovered, business spending contracted and inventories dragged down on the economy.
A gauge of greenback strength and 10-year US Treasury yields were both little changed.
Meanwhile, the Hong Kong Monetary Authority bought the local currency for the first time since November to manage its peg to the dollar. Late last week, the Hong Kong dollar touched the weak end of its 7.75-7.85 trading band versus the greenback, increasing the likelihood of government intervention.
Supporting stocks overnight was the New York Federal Reserve consumer survey, which showed that one-year inflation expectations were little changed in January. This was “modestly reassuring,” according to Vital Knowledge’s Adam Crisafulli.
US inflation probably accelerated in January to 0.5% from December’s 0.1%, while slowing year on year to 6.2% from 6.5%, according to estimates compiled by Bloomberg.
Oil prices, a key inflation component, fell on a report that the Biden administration plans to sell more crude oil from the Strategic Petroleum Reserve.
Still, JPMorgan Chase & Co.’s Marko Kolanovic said that investors should be in bonds since “a recession is currently not priced into equity markets.” Morgan Stanley’s Michael Wilson argued that US stocks are ripe for a selloff after prematurely pricing in a pause in Fed rate hikes.
Key events:
- Japan’s new BOJ governor nomination Tuesday
- US CPI, UK jobless claims, Eurozone GDP, New York Fed President John Williams gives the keynote speech at New York Bankers Association event Tuesday
- US retail sales, UK CPI Wednesday
- US jobless claims, Australia unemployment, Cleveland Fed President Loretta Mester speaks at Global Interdependence Center event Thursday
- France CPI, Russia GDP Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:13 a.m. Tokyo time. The S&P 500 closed up 1.1%
- Nasdaq 100 futures were little changed. The Nasdaq 100 closed up 1.6%
- Japan’s Topix index rose 0.9%
- South Korea’s Kospi index rose 1.1%
- Australia’s S&P/ASX 200 Index rose 0.5%
- Hong Kong’s Hang Seng futures rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0733
- The Japanese yen was little changed at 132.33 per dollar
- The offshore yuan was little changed at 6.8194 per dollar
Cryptocurrencies
- Bitcoin rose 0.7% to $21,783
- Ether rose 1.3% to $1,505.13
Bonds
- The yield on 10-year Treasuries was little changed at 3.71%
- Australia’s 10-year yield was unchanged at 3.76%
Commodities
- West Texas Intermediate crude fell 1.1% to $79.24 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee.
More stories like this are available on bloomberg.com
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