Asian equity futures point to a mixed opening after US stocks closed higher in a volatile session as investors await inflation data for clues on the Federal Reserve’s rate-hike campaign.
(Bloomberg) — Asian equity futures point to a mixed opening after US stocks closed higher in a volatile session as investors await inflation data for clues on the Federal Reserve’s rate-hike campaign.
Contracts for share benchmarks in Australia and Japan pointed to modest gains while those for Hong Kong signaled further declines. The S&P 500 came back higher on Thursday, halting a four-day selloff, while the Nasdaq 100 outperformed. Oil snapped its longest losing streak since December as commodity currencies strengthened in an indication that risk appetite may be picking up.
Japanese markets will be under the spotlight during the Asian trading day, with price data due that’s expected to show core inflation above 4%. That comes as the government’s nominee to be the next central bank governor, Kazuo Ueda, faces his first grilling in parliament. Investors are looking for hints on how hawkish or dovish he will be at time when markets are testing the bank’s yield-curve control program.
Meanwhile, the recovery on Wall Street overnight, which followed the worst selloff this year for equities, came with a series of twists and turns.
One of the reasons is that Friday’s personal consumption expenditures — the Fed’s preferred price gauge — is expected to show acceleration. The report will likely add to a string of unfavorable figures that so far cement the case for the central bank to hold rates at 5.25% for some time, according to Bloomberg Economics’ Anna Wong. The current benchmark sits in a range between 4.5% and 4.75%.
The S&P 500 regained its 4,000 support broken earlier in the week in a fight to stay above a key uptrend line from the October low. On the Nasdaq 100 huge names like Microsoft Corp. and Apple Inc. rebounded and a bullish revenue forecast from Nvidia Corp. sent the shares up 14%.
Investors are caught between welcoming the evidence that the US economy remains on a stable footing and fearing that this resilience will provoke a stern reaction from policymakers, according to Michael Shaoul at Marketfield Asset Management,
“Granted things could be worse, the specter of a rapid deterioration of the economic cycle appears to have been banished, with recent economic data and corporate earnings both confirming that although growth has decelerated from the stimulus driven boom, we have not entered a period of obvious weakness,” he added.
Billionaire quant investor Cliff Asness warned that US stocks are vulnerable to a macro shock if inflation doesn’t stage a spirited decline as the market expects. JPMorgan Chase & Co.’s chief Jamie Dimon told CNBC there’s still a chance for a soft landing for the US economy, though “out in front of us there’s some scary stuff.”
Elsewhere, Bitcoin was on pace for its second monthly advance, breaking with stocks and other riskier assets that have slid amid renewed concern about rising interest rates. The crypto market’s rally recovers only a sliver of the ground lost last year, when prices tumbled and the collapse of the FTX exchange caused a pullback by investors.
Key events this week:
- BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
- US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment, Friday
- Russia’s invasion of Ukraine hits the one-year mark, Friday
Some of the main moves in markets:
Stocks
- Nikkei 225 futures rose 0.3% as of 7:31 a.m. Tokyo time
- Hang Seng futures fell 1.3%
- S&P/ASX 200 futures rose 0.1%
- The S&P 500 rose 0.5% on Thursday
- The Nasdaq 100 rose 0.9% on Thursday
Currencies
- The Bloomberg Dollar Spot Index was little changed on Thursday
- The euro was unchanged at $1.0596
- The Japanese yen was little changed at 134.73 per dollar
- The offshore yuan was little changed at 6.9198 per dollar
- The Australian dollar was little changed at $0.6807
Cryptocurrencies
- Bitcoin fell 0.2% to $23,833.05
- Ether was little changed at $1,643.97
Bonds
- The yield on 10-year Treasuries declined four basis points to 3.88% on Thursday
- Australia’s 10-year yield was little changed at 3.88%
Commodities
- West Texas Intermediate crude rose 2% to $75.39 a barrel on Thursday
- Spot gold fell 0.2% to $1,822.28 an ounce on Thursday
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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