Debt Talk Progress, US Rally Support Asia Stocks: Markets Wrap

Asian stocks gained some support Friday from signs of progress in debt-ceiling talks and an advance in US equities that was fueled by a frenzy of interest in the artificial intelligence sector.

(Bloomberg) — Asian stocks gained some support Friday from signs of progress in debt-ceiling talks and an advance in US equities that was fueled by a frenzy of interest in the artificial intelligence sector.

Shares opened marginally higher in Japan and South Korea, with Australia’s benchmark little changed. Hong Kong’s market is closed for a public holiday. Nvidia Corp.’a bullish sales forecast continued to support tech stocks, with the Nasdaq 100 on Thursday rising 2.5% and the S&P 500 adding 0.9%.

A gauge of the dollar’s strength wavered after a four-day winning streak. The yen remained weaker against the greenback after breaching the 140 level for the first time since November.

The Japanese currency is depreciating amid bets that the Federal Reserve will hike rates within the next two policy meetings. Data showing slowing inflation in Tokyo supported expectations for continued divergence between the Bank of Japan and the Fed, holding the yen down and in turn supporting Japanese stocks.

Treasuries were little changed in early Asian trading. Treasury-bill yields slated to mature early next month had edged higher as investors continued to demand a premium on securities seen most at risk of non-payment if the government exhausts its borrowing capacity. Yields on Australian and New Zealand 10-year notes advanced.

Read More: US on ‘Borrowed Time’ as Debt Cap Drives Cash Below $50 Billion

House Speaker Kevin McCarthy vowed to work through the US holiday weekend to seek an agreement on averting an approaching debt default.

The wrangling in Washington adds to the risks assessed by Fed officials as they consider pausing interest rate increases. Wagers for another quarter-point hike within the next two policy meetings came amid mixed data on Thursday, including a higher revised first-quarter GDP and fewer-than-expected jobless claims.

Oil steadied following its biggest decline since early May after Russia downplayed the likelihood of another OPEC+ production cut. This extended its loss to about 9% this year, with China’s muted economic rebound and tighter US monetary policy combining to weigh on prices. Copper and iron ore have both breached key levels this week, pulling down the Bloomberg Commodity Index.

Promising Tech Stocks

In the US, shares of Nvidia soared 24% after the company’s forecast related to AI surprised even the most optimistic analysts on Wall Street, propelling the company to the cusp of a $1 trillion market value. The AI craze also continued afterhours, when Marvell Technology Inc. projected 2024 revenue from the technology will at least double from a year ago.

The gains are another sign that investors are willing to pile into promising tech stocks, despite the growing worries about China’s economy and a potentially catastrophic US debt default. Fitch Ratings warned that the US’s AAA rating is under threat, though it still expects politicians will reach an agreement before time runs out.

Key events this week:

US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.2% as of 9:23 a.m. Tokyo time. The S&P 500 rose 0.9%
Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 2.5%
Japan’s Topix index rose 0.3%
Australia’s S&P/ASX 200 Index was little changed

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0722
The Japanese yen was little changed at 140.04 per dollar
The offshore yuan was little changed at 7.0930 per dollar
The Australian dollar was little changed at $0.6499

Cryptocurrencies

Bitcoin fell 0.1% to $26,460.08
Ether fell 0.3% to $1,805.09

Bonds

The yield on 10-year Treasuries was little changed at 3.82%
Australia’s 10-year yield advanced four basis points to 3.74%

Commodities

West Texas Intermediate crude fell 0.1% to $71.75 a barrel
Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Isabelle Lee.

More stories like this are available on bloomberg.com