Stocks in Asia are set to follow US equities higher as concerns over financial stability ease and as investors prepare for the Federal Reserve’s interest-rate decision later Wednesday.
(Bloomberg) — Stocks in Asia are set to follow US equities higher as concerns over financial stability ease and as investors prepare for the Federal Reserve’s interest-rate decision later Wednesday.
Futures for benchmarks in Australia, Japan and Hong Kong advanced. Contracts for the S&P 500 were flat after the index advanced 1.3% Tuesday, while the tech-heavy Nasdaq 100 lifted 1.4% as the two US benchmarks posted a second day of gains.
Australian and New Zealand government bond yields rose, tracking the action in the Treasury market on Tuesday. The two-year Treasury yield rose 19 basis points in whipsawing trade, the 10-year yield climbed 12 basis points and an index of the dollar was little changed.
The selling in government bonds alongside rising stock prices indicated fresh appetite for risk taking as investors looked to signs of stability after the collapse of three US banks and UBS Group AG’s takeover of Credit Suisse Group AG.
Treasury Secretary Janet Yellen said the US government could backstop deposits at other US lenders as it did with Silicon Valley Bank. Traders also placed greater odds that the Fed will raise interest rates 25 basis points after market pricing was split between a hike and a pause earlier in the week.
Fed officials are set to issue updated rate projections for the first time since December, offering guidance on whether they still expect any additional hikes this year.
“This is an easier market backdrop,” said Nicholas Colas, co-founder of DataTrek Research. “Expectations of a dramatic about-face for monetary policy are diminishing. Market expectations for near-term Fed rate decisions are now within the realm of the possible. That is good news.”
Every stock in a measure of US financial heavyweights climbed. First Republic Bank surged almost 30% — its best day ever — amid optimism over a new plan under discussion to aid the regional lender. The stock remains far below the level of a few weeks ago, however.
Many were unwilling to sound the all-clear on the financial stability concerns of the past weeks, however. Michael Wilson Morgan Stanley’s chief US equity strategist, said the risk of a credit crunch is increasing materially. Bank of America’s latest global survey that polled fund managers between March 10-16 showed a systemic credit event has replaced stubborn inflation as the key risk to markets.
Key events this week:
- US Treasury Secretary Janet Yellen to appear at Senate subcommittee hearing, Wednesday
- FOMC rate decision, news conference from Chair Jerome Powell, Wednesday
- EIA crude oil inventory report, Wednesday
- Eurozone consumer confidence, Thursday
- BOE interest rate decision, Thursday
- Swiss National Bank rate decision and press conference, Thursday
- US new home sales, initial jobless claims, Thursday
- US Treasury Secretary Janet Yellen testifies to a House Appropriations subcommittee, Thursday
- Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
- US durable goods, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 7:06 a.m. Tokyo time. The S&P 500 rose 1.3%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.4%
- Nikkei 225 futures rose 1.1%
- Hang Seng futures rose 0.7%
- S&P/ASX 200 futures rose 0.9%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0769
- The Japanese yen was little changed at 132.43 per dollar
- The offshore yuan was little changed at 6.8748 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $28,088.79
- Ether fell 0.2% to $1,797.03
Bonds
- The yield on 10-year Treasuries advanced 12 basis points to 3.61%
- Australia’s 10-year yield advanced 13 basis points to 3.33%
Commodities
- West Texas Intermediate crude fell 0.4% to $69.37 a barrel
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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