Asian shares rose alongside US futures as investors looked past further stress among regional American banks to the prospect of the Federal Reserve reversing its policy-tightening campaign.
(Bloomberg) — Asian shares rose alongside US futures as investors looked past further stress among regional American banks to the prospect of the Federal Reserve reversing its policy-tightening campaign.
Stocks in Hong Kong opened higher while Australian equities erased a morning decline, tracking gains in US futures. Europe stock futures also rose. A gauge of Asian shares is set for its best week in three, led by a 1.1% increase in the financial sector, suggesting the region is relatively insulated from the US banking turmoil.
Instead, markets in the region benefited from a weaker dollar, with swaps pointing to bets on a US rate cut by July. The Bloomberg dollar index fell for a fourth day and faces its worst week in more than a month. The policy-rate sensitive two-year Treasury yield has dropped 22 basis points this week, the most since early March.
“We do believe the US interest rates are peaking and we should see a decline,” Irene Goh, head of multi-asset solutions, APAC, for abrdn, said in an interview with Bloomberg Television. “However, the decline or easing of monetary policy should probably come only when a recession hits.”
A small advance for oil placed the commodity on track for its first gain in five days after a decline on signs of weaker demand dragged the price more than 10% lower this week. Gold held gains of around 3% this week.
Bourses in Japan and South Korea were closed for a holiday. Australian and New Zealand yields were broadly flat Friday. Treasuries won’t trade in Asian hours given the holiday in Japan.
ANZ Group Holdings Ltd. shares rose after the lender’s first-half profit met analyst expectations. Macquarie Group Ltd. fell after a slowdown in dealmaking overshadowed its consensus-beating earnings results.
“We’re cautious on banks across the region,” said Jonathan Garner, chief Asia and emerging markets strategist for Morgan Stanley. “When we look at Australia, the further hike from the RBA was not expected by the market and we have an inherently leveraged economy on the consumer side. That does raise issues going forward on credit quality for the banks.”
Bank Fears
Another unsettling round of trading halts hit US lenders including Western Alliance Bancorp, PacWest Bancorp and First Horizon Corp. in a deepening rout that boosted havens including the yen.
“The acute phase of bank turmoil may not be over, and policymakers need urgently to recognize that,” said Krishna Guha, vice chairman at Evercore ISI. “The problem is that their financial stability policy options are limited.”
Apple Inc. rose in late hours after reporting earnings. Nevertheless, Wall Street’s fear gauge, the Cboe Volatility Index (VIX), spiked to hit the key 20 mark. That’s a stark contrast with the calm that prevailed in markets for the most part in April and saw the measure dropping below 16 just last week.
Traders are also gearing up for Friday’s key jobs report, following data that showed applications for US unemployment benefits rose by the most in six weeks while continuing claims fell.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 12:40 p.m. Tokyo time. The S&P 500 fell 0.7%
- Nasdaq 100 futures rose 0.5%. The Nasdaq 100 fell 0.4%
- Australia’s S&P/ASX 200 rose 0.3%
- Hong Kong’s Hang Seng rose 0.6%
- The Shanghai Composite fell 0.7%
- Euro Stoxx 50 futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.1040
- The Japanese yen rose 0.2% to 134.03 per dollar
- The offshore yuan was little changed at 6.9146 per dollar
Cryptocurrencies
- Bitcoin rose 1.2% to $29,229.37
- Ether rose 1.1% to $1,899.6
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.38% Thursday
- Australia’s 10-year yield advanced two basis points to 3.33%
Commodities
- West Texas Intermediate crude rose 0.7% to $69.01 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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