Asian shares rose as markets shrugged off faster-than-expected US producer price data and took heart from less hawkish Federal Reserve commentary. A move by China’s sovereign wealth fund to buy shares of the country’s largest banks fueled further optimism.
(Bloomberg) — Asian shares rose as markets shrugged off faster-than-expected US producer price data and took heart from less hawkish Federal Reserve commentary. A move by China’s sovereign wealth fund to buy shares of the country’s largest banks fueled further optimism.
Stock benchmarks climbed at least 0.8% in Japan and South Korea, putting MSCI’s Asian equity index on course for a sixth day of gains. The Hang Seng Index jumped as much as 2.1% after China’s state-owned Central Huijin Investment Ltd. increased its stake in the nation’s biggest banks for the first time since 2015. Oil fell for a third day, erasing all of the surge on Monday that followed Hamas’ attack on Israel.
“Central Huijin’s modest yet symbolic investments are very likely aimed at supporting share prices, which has already led to a positive market response,” Redmond Wong, a market strategist at Saxo Capital Markets in Hong Kong, wrote in a note. “This move, reminiscent of its actions during the 2015 Chinese equity market turmoil, signifies the government’s desire to maintain market stability.”
Traders’ focus is now turning to Thursday’s US consumer price data, which economists are forecasting will show a further easing in inflation. Fed minutes published Wednesday showed officials agreed last month policy should remain restrictive for some time, while noting the risks of overtightening now had to be balanced against keeping inflation on a downward path.
US CPI is forecast to have slowed to an annual rate of 3.6% in September from 3.7% the previous month, according to a Bloomberg survey. Data published Wednesday showed prices paid to producers rose by more than forecast in September, bolstered by higher energy costs.
Futures for US stocks advanced after the S&P 500 rose for a fourth day Wednesday, its longest winning streak since August on the back of the Fed officials’ comments.
Fed officials are taking a more patient approach now that rates are at or near their peak, Boston Fed President Susan Collins said Wednesday. Her Atlanta counterpart Raphael Bostic said the central bank doesn’t need to keep tightening unless inflation’s descent starts to stall.
“The Fed is near the end of their rate hiking campaign and the events of the past weekend likely solidify this view,” said Jeffrey Roach, chief economist at LPL Financial. “The risk of overtightening appears to be in balance with the risk of insufficient tightening.”
The dollar edged lower against most of its Group-of-10 peers, while the yen held near 149 to the greenback. Treasury 10-year yields were little changed at 4.57% after dropping to a two-week low of 4.54% Wednesday.
West Texas Intermediate slipped below $83 a barrel after slumping Wednesday following a New York Times report that Iran may have been surprised by the assault. Gold was little changed.
Key events this week:
- Bank of Japan’s Asahi Noguchi speaks, Thursday
- UK industrial production, Thursday
- US initial jobless claims, CPI, Thursday
- European Central Bank publishes account of September policy meeting, Thursday
- Fed’s Raphael Bostic speaks, Thursday
- China CPI, PPI, trade, Friday
- Eurozone industrial production, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
- G20 finance ministers and central bankers meet as part of IMF gathering, Friday
- ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
- Fed’s Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 11:25 a.m. Tokyo time. The S&P 500 rose 0.4%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.7%
- Japan’s Topix rose 1.2%
- Hong Kong’s Hang Seng Index rose 1.7%
- China’s Shanghai Composite Index rose 0.4%
- Australia’s S&P/ASX 200 rose Index 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0622
- The Japanese yen was little changed at 149.19 per dollar
- The offshore yuan was little changed at 7.3019 per dollar
- The Australian dollar was little changed at $0.6415
Cryptocurrencies
- Bitcoin rose 0.3% to $26,806.91
- Ether fell 0.2% to $1,559.98
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.57%
- Japan’s 10-year yield was little changed at 0.770%
- Australia’s 10-year yield declined six basis points to 4.37%
Commodities
- West Texas Intermediate crude fell 0.8% to $82.85 a barrel
- Spot gold rose 0.1% to $1,876.91 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Stephen Kirkland and Winnie Hsu.
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