Stocks rose and the dollar weakened, as investors weighed the prospect of the Federal Reserve reversing its policy-tightening campaign ahead of US jobs data due later Friday. Oil edged higher.
(Bloomberg) — Stocks rose and the dollar weakened, as investors weighed the prospect of the Federal Reserve reversing its policy-tightening campaign ahead of US jobs data due later Friday. Oil edged higher.
US and European equity futures, and stocks in Hong Kong and Australia advanced. Mainland China shares were lower. A gauge of Asian stocks is set for its best week in five, led by a 1.1% increase in the financial sector, suggesting the region is relatively insulated from the US banking turmoil.
Instead, markets in Asia Pacific 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 signs of weaker demand dragged the price more than 10% lower this week. Gold held gains of around 3% this week. The commodity-reliant currencies of Australia, New Zealand and Norway posted the biggest gains against the dollar.
Bourses in Japan and South Korea were closed for a holiday. Australian and New Zealand yields were broadly flat Friday. Treasuries don’t trade in Asian hours given the holiday in Japan.
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.
“Any whiff of meaningful labor market softening will be seen as validating the Fed’s recent decision to turn more data dependent and dovish,” Michael Wan, senior currency analyst at MUFG Bank Ltd., wrote in a note.
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.”
Apple Inc. rose in late hours after reporting earnings. Nevertheless, Wall Street’s fear gauge, the Cboe Volatility Index, rose above 20 for the first time since March, ending a period of calm.
Bank Fears
Trading halts hit US lenders including Western Alliance Bancorp, PacWest Bancorp and First Horizon Corp. deepening a rout in US regional banks. Lawyers from US law firm Watchtell Lipton, Rosen & Katz urged regulators to impose a temporary ban on short selling while the sector stabilizes.
Others pointed to robust first-quarter earnings as a sign investors were overly worried about a broader banking meltdown. “The recent selloff in regional bank stocks is overdone as price action has been disconnected from fundamentals,” Truist Securities analyst Brandon King wrote in a note.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 2:44 p.m. Tokyo time. The S&P 500 fell 0.7%
- Nasdaq 100 futures rose 0.4%. 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 0.5%
- Euro Stoxx 50 futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.1041
- The Japanese yen rose 0.3% to 133.95 per dollar
- The offshore yuan was little changed at 6.9163 per dollar
Cryptocurrencies
- Bitcoin rose 1.3% to $29,265.32
- Ether rose 1.1% to $1,899.27
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.38% Thursday
- Australia’s 10-year yield advanced three basis points to 3.34%
Commodities
- West Texas Intermediate crude rose 0.8% to $69.08 a barrel
- Spot gold fell 0.2% to $2,046.99 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from John Cheng.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.