Stocks in Asia broadly climbed on cautious optimism the Federal Reserve may pause rate hikes following the US inflation report that was in line with estimates. The dollar slipped.
Japan’s Nikkei 225 outperformed the region and equities in South Korea and Australia gained as a benchmark index for the region snapped a two-day loss. US stock futures also rose. Japanese shares received an extra boost after Economic Revitalization Minister Yoshitaka Shindo said the government will use all policies for economic management and highlighted the need for strong economic measures.
The greenback weakened against all of its Group-of-10 peers and Treasury yields ticked lower. The euro ticked higher against the dollar as traders awaited the rate decision by the European Central Bank later Thursday. Elsewhere, demand for Japanese 20-year bonds at auction was the strongest since May 2020, soothing concerns about a potential normalizing of monetary policy by the Bank of Japan.
The US’s core consumer price index, which excludes food and energy costs, increased 4.3% from a year ago — in line with estimates and marking the smallest advance in nearly two years. Also due later Thursday are US retail sales and producer price data.
“Asia has some clear air to reclaim some of the week’s losses,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “US inflation offered up more questions than answers, but it’s a volatility event out of the way, so that’s supportive of risk assets at the margins - the proverbial can has been kicked down the road just a little.”
Hong Kong and mainland China shares swung between gains and losses as concerns remained in the property sector. Country Garden Holdings Co. fell as the deadline approaches for holders of a yuan bond to vote on the company’s repayment extension request.
Eyes on Next Data
Evidence is building that Europe is facing persistent cost pressures that have been made worse by soaring energy prices. Money markets are pricing in a two-thirds chance the ECB raises interest rates by a quarter of a percentage point, a rapid shift from earlier this month where traders were firmly in the camp rates would be held steady.
“It will be a close decision,” said Imre Speizer, a strategist at Westpac Banking Corp. in Auckland. “Inflation persistence is likely to feature in the ECB’s upgraded projections” with core prices more stubborn, he wrote in a note to clients.
The S&P 500 was little changed on Wednesday while the Dow Jones Industrial Average underperformed. American Airlines Group Inc. led US stock losses after cutting its earnings outlook amid a jump in jet fuel prices. Most megacaps rose, with the chiefs of five of the 10 biggest US companies appearing at a closed-door Senate meeting to shape how artificial intelligence is regulated. Apple Inc. fell as China flagged security problems with iPhones.
In commodities, oil trade near the highest since November after the International Energy Agency added to warnings of a supply shortfall, while gold edged higher after losses in the last two sessions.
Key events this week:
- Japan industrial production, Thursday
- European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
- US retail sales, PPI, business inventories, initial jobless claims, Thursday
- China property prices, retail sales, industrial production, Friday
- US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 1:05 p.m. Tokyo time. The S&P 500 rose 0.1% on Wednesday
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 0.4%
- Japan’s Topix rose 0.9%
- Australia’s S&P/ASX 200 rose 0.6%
- Hong Kong’s Hang Seng fell 0.2%
- The Shanghai Composite was little changed
- Euro Stoxx 50 futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.1% to $1.0746
- The Japanese yen rose 0.3% to 147.09 per dollar
- The offshore yuan was little changed at 7.2761 per dollar
- The Australian dollar rose 0.2% to $0.6437
Cryptocurrencies
- Bitcoin rose 0.2% to $26,272.73
- Ether rose 1.1% to $1,620.94
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.22%
- Japan’s 10-year yield was little changed at 0.700%
- Australia’s 10-year yield declined five basis points to 4.09%
Commodities
- West Texas Intermediate crude rose 0.5% to $88.96 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Tassia Sipahutar.
