(Bloomberg) — Asian shares rose Thursday after U.S. stocks hit a new high, ahead of inflation data that could shape the Federal Reserve’s policy easing in coming months.
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Stocks in Japan, South Korea and Australia rose, while stock futures in Hong Kong also rose. An index of U.S.-listed Chinese companies fell in trading in New York, following the biggest decline in more than four years for mainland China’s benchmark index on Wednesday.
Government bonds were steady in early trading in Asia after yields rose in New York on Wednesday. The Bloomberg Dollar Spot Index held steady Thursday after rising 0.4% in the previous session — for the eighth day in a row. The yen was little changed against the dollar after falling to its lowest level since mid-August on Wednesday at around 149 per dollar.
Few signs of additional support emerged for the Chinese economy and financial markets, signaling further swings for the country’s stocks. A measure of volatility for Hong Kong stocks was slightly lower on Wednesday but remained well above historical averages. A sticking point for investors is whether there will be more fiscal stimulus measures. Authorities said on Wednesday that a press conference on the subject would be held this weekend.
Taiwan Semiconductor Manufacturing Co. posted a better-than-expected 39% increase in quarterly revenue on Wednesday. Markets in Taiwan are closed on Thursday.
The S&P 500 rose 0.7% to a record high, the 44th of the year, with technology stocks again driving gains. Apple Inc. climbed 1.7%. Nvidia Corp. stalled a five-day rally, while Tesla Inc. went lower in the run-up to the launch of Robotaxi. Alphabet Inc. fell 1.5% on news that the US is considering a Google breakup in a landmark antitrust case over big tech companies.
The gains for tech reflected earlier weakness that presented an attractive buying opportunity, said Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management. “We remain positive on the technology sector and on the prospects for artificial intelligence,” she said. “We believe volatility should be used to build long-term exposure to AI.”
US consumer price data to be released later Thursday is expected to see inflation moderate further, supporting expected Fed easing in coming months. Nevertheless, market prices indicate that the likelihood of another 50 basis point rate cut is all but ruled out after last week’s strong jobs report.
Markets barely budged on Wednesday after minutes of the Fed’s latest meeting showed some support for Jerome Powell for a half-point rate cut in September as some officials favored a smaller cut.
“Policymakers agree that inflation is easing and they see potential weakness in job growth,” said David Russell of TradeStation. “That keeps interest rate cuts on the table if necessary. The bottom line is that Powell may turn the market upside down at the end of the year.”
Inflation data
The consumer price index rose by 0.1% in September, the smallest increase in three months. Compared to a year earlier, the CPI is likely to have risen 2.3%, the sixth consecutive slowdown and the tamest since early 2021. The indicator excluding volatile food and energy categories, which provides a better picture of underlying inflation, is expected to increase by 0.2%. compared to a month earlier and 3.2% from September 2023.
“The Fed’s decision to shift its focus from inflation to the labor market means that inflation data, including tomorrow’s CPI, is likely to become less market-moving than before,” said Matthew Weller of Forex.com and City Index.
“Despite this logical observation, this month’s CPI report could still drive market volatility on the back of Friday’s stellar jobs report, a figure that signals the potential for renewed upside risks to inflation,” he added.
Meanwhile, Mary Daly, president of the Fed Bank of San Francisco, said she expects the U.S. central bank to continue cutting interest rates this year in an effort to protect the labor market. “I think two more cuts this year, or one more cut this year, is really within the range of what’s likely,” Daly said Wednesday, referring to one or two quarter-point cuts.
On the commodity front, oil held steady as US crude inventories rose and traders kept an eye on China’s fiscal policy plans. Gold was little changed on Thursday after falling in the previous six sessions.
Main events this week:
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US CPI, initial unemployment claims, Thursday
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John Williams and Thomas Barkin of the Fed will speak on Thursday
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JPMorgan and Wells Fargo kick off earnings season for the major Wall Street banks on Friday
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U.S. PPI, University of Michigan Consumer Confidence, Friday
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The Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman will speak Friday
Some of the major moves in the markets:
Stocks
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Futures on the S&P 500 were little changed at 9:01 a.m. Tokyo time
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Hang Seng futures rose 2.1%
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Japan’s Topix rose 0.6%
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Australia’s S&P/ASX 200 rose 0.4%
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Euro Stoxx 50 futures rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0942
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The Japanese yen rose 0.1% to 149.10 per dollar
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The offshore yuan was little changed at 7.0906 per dollar
Cryptocurrencies
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Bitcoin rose 0.3% to $60,594.23
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Ether rose 0.6% to $2,368.59
Bonds
Raw materials
This story was produced with the help of Bloomberg Automation.
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