Stocks in Asia edged higher Tuesday, tracking similar gains in the US as investors continued to weigh the potential for a soft landing given expectations for higher interest rates.
(Bloomberg) — Stocks in Asia edged higher Tuesday, tracking similar gains in the US as investors continued to weigh the potential for a soft landing given expectations for higher interest rates.
Shares climbed in Japan, South Korea and Australia, while equity futures for Hong Kong rose. US contracts ticked higher following a 0.3% advance for the S&P 500 and a 0.7% gain for the tech-heavy Nasdaq 100 on Monday. The rebound comes after recent selloffs sparked by rate-hike fears.
Treasury 10-year yields fell three basis points on Monday, as the benchmark pulled back from the 4% mark. Yields on Australian and New Zealand 10-year bonds inched lower Tuesday. The Bloomberg Dollar Spot Index was little changed, after falling 0.3% on Monday.
Traders are now pricing US rates to peak at 5.4% this year, compared with about 5% just a month ago. Federal Reserve Governor Philip Jefferson firmly stood by the central bank’s 2% inflation goal on Monday. A series of hawkish Fed speak this month has trimmed January’s gains across asset markets. In Asia, a equity benchmark is poised to fall this month by the most since September.
“It’s becoming increasingly clear to the market that the Federal Reserve is not yet finished with rate hikes,” Seema Shah, chief global strategist at Principal Asset Management, wrote in a note. “Relentless monetary tightening will eventually weigh on both the economy and earnings — a headwind that will, inevitably, renew and extend the equity market drawdown.”
US data on Monday further outlined the challenge facing the central bank. Pending home sales increased in January by the most since June 2020. Durable goods orders fell, but after accounting for a drop in transportation equipment rose more than expected. Orders placed with factories for business equipment also rose.
US wholesale inventories and consumer confidence data will be released later Tuesday. On Thursday, US initial jobless claims will shine further light on the health of the robust labor market.
Investors will be keeping a close eye on Adani Group shares as the conglomerate continues on an investor roadshow in Asia. Executives said in sessions on Monday that it has enough money to repay debts for the next three years in addition to an $800 million cash pile.
Read More: Traders See US Economy as a Balloon Directed by Multiple Forces
Elsewhere, oil was set for a fourth straight monthly decline as concerns about tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in China. Gold headed for a monthly fall, the first since October.
Key events this week:
- US wholesale inventories, Conf. Board consumer confidence, Tuesday
- China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday
- Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- Eurozone CPI, unemployment, Thursday
- US initial jobless claims, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:09 a.m. Tokyo time. The S&P 500 rose 0.3%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.7%
- Japan’s Topix index rose 0.4%
- South Korea’s Kospi index rose 0.8%
- Australia’s S&P/ASX 200 Index rose 0.6%
- Hong Kong’s Hang Seng futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0611
- The Japanese yen fell 0.1% to 136.33 per dollar
- The offshore yuan was little changed at 6.9596 per dollar
Cryptocurrencies
- Bitcoin rose 0.4% to $23,479.82
- Ether rose 0.3% to $1,633.1
Bonds
- The yield on 10-year Treasuries was little changed at 3.92%
- Australia’s 10-year yield declined two basis points to 3.85%
Commodities
- West Texas Intermediate crude rose 0.1% to $75.78 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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