Asian equities traded higher and US share futures gained amid cautious optimism that solid post-market US tech earnings are set to spur a rebound on Wall Street while traders await American economic data including the Federal Reserve’s preferred gauge of underlying price pressures.
Shares in Hong Kong and Japan led the advances in Asia, while Australian and South Korean stocks were also in the green. Mainland Chinese shares edged higher after data on industrial companies’ profit showed growth, though slightly softer than in the prior period.
Contracts on the Nasdaq 100 climbed in the Asian session after the underlying benchmark fell 1.9% on Thursday. Amazon.com Inc. and Intel Corp. both gained in after-trading hours after the tech-heavy index hit its lowest since May. The advance in US futures points to an early rebound when trading begins on Wall Street after the S&P 500 came to the brink of closing in correction territory.
Higher US GDP growth, a less dire industrial profit slump in China and earnings beats by US tech giants “bake into a long-awaited relief for stressed investors,” said Hebe Chen, an analyst at IG Markets in Melbourne. “As we approach the end of the month, investors are holding their breath for next week’s FOMC meeting, which is poised to set the tone for the remainder of the year.”
The upbeat performances will be tested by a raft of economic data due Friday, including US figures on the PCE deflator, personal spending and income, and University of Michigan consumer sentiment.
Treasury yields were mostly unchanged after falling Thursday following a solid seven-year bond auction and a rise in continuing jobless claims, an indication the US labor market is starting to crack despite still strong economic growth. Traders are now awaiting the PCE deflator print on Friday to solidify bets the Federal Reserve will pause next week.
Still, swaps contracts project a roughly one in three chance of another Fed hike in the current tightening cycle, according to data compiled by Bloomberg.
High Sense of Urgency
In currencies, the dollar fell, while the yen was steady after Tokyo inflation, an indicator of Japanese consumer cost pressures, unexpectedly accelerated for the first time in four months. Japan’s Finance Minister Shunichi Suzuki reiterated officials are watching currency moves with a high sense of urgency.
Also in focus is the meeting between China’s Foreign Minister Wang Yi and US Secretary of State Antony Blinken in Washington. In his US visit, Wang said the two countries should have “in-depth” dialog as they need to address common interests and reduce misunderstandings, the official Xinhua News Agency reported.
Meanwhile, traders are keeping a close eye on geopolitical developments in the Middle East, with Israel’s military saying it killed Hamas’s deputy head of intelligence, who it said was responsible for helping plan the Oct. 7 attacks. The army overnight also made a limited ground raid into northern Gaza while Iran escalated its rhetoric with the US.
West Texas Intermediate oil traded rose over $84 a barrel on concerns that the Israel-Hamas war may spark a wider conflict and disrupt crude supplies. Gold edged higher.
Key events this week:
- US PCE deflator, personal spending and income, University of Michigan consumer sentiment, Friday
- Exxon Mobil earnings, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.6% as of 6:34 a.m. London time. The S&P 500 index fell 1.4%
- Nasdaq 100 futures rose 0.8%. The Nasdaq 100 index fell 1.9%.
- Japan’s Topix rose 1.1%
- Hong Kong’s Hang Seng rose 1.6%
- Australia’s S&P/ASX 200 rose 0.2%
- The Shanghai Composite rose 0.9%
- Euro Stoxx 50 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0567
- The British pound was little changed at $1.2135
- The Japanese yen surged 0.1%, more than any closing gain since Oct. 13
- The offshore yuan was little changed at 7.3196 per dollar
- The British pound was little changed at $1.2135
Cryptocurrencies
- Bitcoin fell 0.3% to $34,077.00
- Ether slipped 0.3%
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.86%
- Germany’s 10-year yield declined three basis points to 2.86%
- Britain’s 10-year yield declined one basis point to 4.60%
- Australia’s 10-year yield declined six basis points to 4.81%
Commodities
- West Texas Intermediate crude rose 1.5% to $84.49 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Tassia Sipahutar and Georgina McKay.
