Asian equity markets opened higher, tracking US stocks, as weaker producer prices fueled expectations the Federal Reserve is nearing the end of its most aggressive rate-hike cycle in decades.
(Bloomberg) — Asian equity markets opened higher, tracking US stocks, as weaker producer prices fueled expectations the Federal Reserve is nearing the end of its most aggressive rate-hike cycle in decades.
An Asia Pacific stock gauge was set to end the week on a positive note as it headed for the highest close since February. Futures for Hong Kong’s equity benchmark signaled a gain. US futures were little changed after the S&P 500 rose the most this month and the tech-heavy Nasdaq had the best day since the middle of March.
A gauge of the dollar’s strength extended its decline into a fourth day and the currency remained weaker against most of its Group-of-10 peers. South Korean won led the gains among Asian currencies in early trading. In more signs of peak rates, the Singapore central bank kept its policy settings unchanged after five tightening moves.
Treasuries were steady on Friday after the yields ended higher in New York Thursday amid improved risk sentiment. The policy-sensitive two-year yield, however, stayed within a narrow range around 3.96% as the market continued to lean toward a quarter-point Fed hike in May with the central bank then expected to pause over the summer. Australian bonds fell.
US stocks rallied Thursday as jobs and factory-gate inflation data were weaker than economists forecast. Jobless claims for the week ended April 8 rose to 239,000, compared with a median estimate of 235,000, adding to evidence the labor market is starting to soften. Producer prices fell in March by the most since the start of the pandemic.
“Inflation is not surprising to the upside,” said Que Nguyen, chief investment officer of equity strategies at Research Affiliates. “At the same time, the job market seems stable. And so what we’re getting today is sort of an optimistic outlook that we’re going to have an almost like a Goldilocks situation where inflation’s going to slow, but the economy is not crashing.”
Elsewhere, Amazon.com Inc. gained the most in two months after announcing new technology aimed at cloud customers and a marketplace for AI tools.
Banks, including JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc., will kick off the earnings season on Friday, with executive commentary on the probability of a recession in focus.
“When you’re talking about earnings, that could just give us the data that shows that we’re seeing the destruction or the challenge on growth that all of this tightening may have impacted,” Kathryn Kaminski, chief research strategist and portfolio manager at Cambridge-based AlphaSimplex Group, said on Bloomberg Radio.
Meanwhile, China’s megabanks are planning at least 40 billion yuan ($5.8 billion) of bond sales, kicking off a major funding push to comply with global capital requirements by early 2025.
In commodities, oil and gold steadied.
Key events this week:
- US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
- Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Some of the main market moves:
Stocks
- S&P 500 futures were little changed as of 9:10 a.m. Tokyo time. The S&P 500 rose 1.3%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 2%
- Japan’s Topix index rose 0.3%
- Australia’s S&P/ASX 200 Index was little changed
- Hong Kong’s Hang Seng futures rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1051
- The Japanese yen was little changed at 132.56 per dollar
- The offshore yuan was little changed at 6.8713 per dollar
- The Australian dollar was unchanged at $0.6782
Cryptocurrencies
- Bitcoin rose 0.3% to $30,386.61
- Ether rose 0.1% to $2,011.5
Bonds
- The yield on 10-year Treasuries was little changed at 3.44%
- Australia’s 10-year yield advanced five basis points to 3.32%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jennifer Bissell-Linsk.
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