Asian stocks are set for a mixed open after a $2.7 trillion rally in US shares fueled by bets that the Federal Reserve will end its hiking cycle fizzled out.
Australian shares edged higher in early trading and equity futures in Hong Kong also pointed to gains, while contracts in Japan signaled losses. US futures were little changed after the S&P 500 inched above 4,500 on Friday to notch its third straight week of gains — the longest run since July.
Equities have made a rapid about-face to “overbought” from “oversold” levels — spurring calls they are due for a breather. After an “epic risk rally,” investors should offload those assets as technical and macroeconomic headwinds are building, according to Michael Hartnett, chief investment strategist at Bank of America Corp. “Fade it,” he said.
Investors are also watching for any fallout from Sam Altman’s shock ouster as chief executive of OpenAI. A group of the company’s executives and investors racing to get him reinstated has reached an impasse over the makeup and role of the board, according to people familiar with the negotiations.
In the Middle East, a deal with Hamas to release hostages taken during the Oct. 7 attack on Israel may be the closest yet and would require a multiday pause in the fighting in Gaza, US Deputy National Security Advisor Jon Finer said Sunday.
Last week was the dollar’s worst in four months amid bets the currency has already peaked, with softer-than-expected economic data reinforcing bets the Fed is done with rate hikes. Oil rebounded after briefly entering a bear market, but posted its fourth straight weekly drop on supply pressures.
Gauges of US and global bond returns erased year-to-date losses. Still, Franklin Templeton’s Sonal Desai said last week’s rally has gone too far, too fast.
“Markets are priced for beyond the perfect landing,” she told Bloomberg Television. “There do remain risks to inflation, and there isn’t enough data to support the rate cuts priced for next year.”
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Traders in Asia on Monday will get their chance to digest the latest Fedspeak. Fed Vice Chair for Supervision Michael Barr reiterated officials are likely at or near the end of their tightening campaign. Yet Fed Bank of San Francisco President Mary Daly said policymakers aren’t certain inflation is on a path to their 2% target.
“The near-term risk is that the market has gotten ahead of itself,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “Fed officials and central bankers may lean against what might be seen as premature easing of financial conditions.”
This week, investors will also be keeping a close eye on Nvidia Corp. earnings as well as China loan prime rates and inflation readings in Canada and Japan. Trading is likely to become more muted toward the end of the week with the US Thanksgiving Holiday on Thursday.
Key events this week:
- China 1- and 5-year loan prime rates, Monday
- Thailand GDP, Monday
- Hong Kong CPI, Tuesday
- Canada CPI, Tuesday
- Federal Reserve Nov. policy meeting minutes, Tuesday
- Nvidia earnings, Tuesday
- ECB President Christine Lagarde speaks, Tuesday
- Eurozone consumer confidence, Wednesday
- Singapore GDP, Wednesday
- Bank Indonesia policy decision, Thursday
- Eurozone PMIs, Thursday
- Norway GDP, Thursday
- Thanksgiving holiday in the US, Thursday
- Japan CPI, Friday
- Germany GDP, Friday
- US manufacturing PMI, Friday
- Black Friday sales begin, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:24 a.m. Tokyo time. S&P 500 rose 0.1% on Friday
- Australia’s S&P/ASX 200 rose 0.1%
- Nikkei 225 futures fell 0.2%
- Hang Seng futures rose 1%
Currencies
- The Australian dollar was little changed at $0.6518
- The euro was little changed at $1.0910
- The Japanese yen was little changed at 149.72 per dollar
- The offshore yuan was little changed at 7.2194 per dollar
Cryptocurrencies
- Bitcoin rose 1% to $37,376.9
- Ether rose 0.9% to $2,001.43
Bonds
- Australia’s 10-year yield advanced two basis points to 4.49%
- The yield on 10-year Treasuries was little changed at 4.44% on Friday
- Japan’s 10-year yield declined 3.5 basis points to 0.750%
Commodities
- West Texas Intermediate crude was little changed at $75.92 a barrel
- Spot gold fell 0.1% to $1,978.54 an ounce
This story was produced with the assistance of Bloomberg Automation.
