Asian Stocks Edge Higher Ahead of Lunar New Year: Markets Wrap

Asian stocks shook off worries from rising interest rates and economic risks to advance on Friday before Lunar New Year holidays interrupt trading across many markets in the region next week.

(Bloomberg) — Asian stocks shook off worries from rising interest rates and economic risks to advance on Friday before Lunar New Year holidays interrupt trading across many markets in the region next week.

Hong Kong equities led gains and shares in Japan reversed small initial losses. Futures for US stocks rose after the selloff on Wall Street showed some signs of easing Thursday, when the S&P 500 fell for a third day.

Commodities and Asian equities have shrugged off some of the bearish news this week out of the US as traders bet on China’s economic revival. JPMorgan Chase & Co. raised its estimate for the nation’s oil demand growth and said it’s reopening sooner and more rapidly than the bank originally expected.

Treasuries fell slightly with the 10-year yield climbing two basis points to take the edge off a drop in the rate earlier in the week.

Japan’s benchmark 10-year bond yield was at 0.405% versus the central bank’s 0.5% ceiling. Australian 10-year yields were up six basis points.

The yen weakened slightly after consumer price data — which was in line with estimates — showed inflation at 4% for the first time in more than four decades. A gauge of dollar strength was little changed on the day and the week.

Traders remain on the lookout for clues on the path ahead for the Federal Reserve. Vice Chair Lael Brainard, considered a dove, said Thursday rates would need to stay elevated for a period to further cool inflation. She didn’t state a preference for whether the Fed should downshift hikes at its next meeting or what peak rate she envisioned this year.

Her comments came a day after Fed hawks called for boosting rates, with St. Louis Fed President James Bullard penciling in a forecast for a rate range of 5.25% to 5.5% by the end of this year. The current range is 4.25% to 4.5%.

Adding to the somber mood in the US, the federal debt limit was hit and the Treasury Department began the use of special measures to avoid defaulting on any payments.

Data were mixed, with new US home construction declining for a fourth-straight month in December. Applications for US unemployment benefits unexpectedly fell last week, sliding to the lowest level since September and underscoring a strong jobs market. That followed figures a day earlier showing producer prices and retail sales fell, while business equipment production slumped.

Elsewhere in markets, oil headed for a second weekly gain as optimism over stronger Chinese demand overshadowed a weaker outlook in other major economies.

Copper was poised for a fifth weekly increase, its best run since May 2021, with global supply risks persisting and inventories near historic lows. Gold steadied in Asia after jumping to an eight-month high in the previous session.

Key events on Friday:

US existing home sales, Friday
IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday

Here are some of the main market moves:

Stocks

S&P 500 futures rose 0.2% as of 12:47 p.m. Tokyo time. The S&P 500 fell 0.8%
Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 1%
Euro Stoxx 50 futures rose 0.4%
Japan’s Topix rose 0.4%
Australia’s S&P/ASX 200 rose 0.1%
The Shanghai Composite rose 0.5%
The Hang Seng Index rose 0.9%

Currencies

Bloomberg Dollar Spot Index was little changed at 1,226.27
The euro was unchanged at $1.0833
The Japanese yen fell 0.3% to 128.76 per dollar
The offshore yuan fell 0.1% to 6.7806 per dollar
The Australian dollar rose 0.2% to $0.6922

Bonds

The yield on 10-year Treasuries advanced two basis points to 3.41%
Japan’s 10-year yield was unchanged at 0.405%
Australia’s 10-year yield advanced eight basis points to 3.40%

Commodities

West Texas Intermediate crude rose 0.5% to $80.76 a barrel
Spot gold fell 0.2% to $1,928.08 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Stephen Kirkland and Rob Verdonck.

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