Asian Stocks Have Gained Cautiously As US Eases Concerns: Wrapping Markets

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(Bloomberg) — Asian shares rose after the Federal Reserve’s preferred inflation gauge came in below expectations, reigniting bets on a rate cut. The dollar strengthened.

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The MSCI Asia Pacific Index fell in six days, with benchmarks in Australia, Japan and South Korea up around 0.5%. Futures in Hong Kong have shown gains. US equity contracts rose after the S&P 500 Index advanced 1.1% on Friday, as personal consumption expenditures rose at their slowest pace since May.

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Monday’s gains will provide a respite to global markets after stocks fell the most weekly in more than three months as the release of strong US economic data prompted the Fed to push back the amount of tapering it expected in 2025. As Chairman Jerome Powell focuses on inflation. Going forward, Friday’s muted numbers will likely reassure policymakers — and investors — that the economy is cooling despite being strong.

“The core PCE data that was expected in November suggests that the Fed is likely to be more bearish on monetary policy,” Shane Oliver, head of investment strategy and chief economist at AMP Ltd., wrote to clients. “Our overall assessment remains that the trend in stocks remains, including Australian stocks, but we expect a volatile and bumpy ride in the coming year.”

Australia’s 10-year yield fell six basis points in early trade, following a rally in US Treasuries after Friday’s PCE data. Stocks were little changed in Asia on Monday.

The Bloomberg dollar gauge was steady after slipping 0.5% on Friday. President Joe Biden has signed a budget bill that will keep the US government running until mid-March, averting a year-end shutdown and kicking off future spending decisions from Donald Trump’s office.

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Sentiment could change quickly as investors look to the inauguration of President-elect Trump in January and the prospect of higher global oil prices, adding to an already difficult period in emerging Asia as sentiment on Chinese commodities weakens.

Asian stocks are set for their first quarterly loss since September 2023 while the region’s financial gauge fell to its lowest in more than two years last week. China’s one-year bond yields fell below levels last seen in the global financial crisis on Friday, as traders increased bets on monetary easing.

“The recent decline in Asia FX, in our view, is largely driven by dollar retention, a significant shift in the Chinese government’s stance towards a loose monetary outlook” and a deterioration in the outlook for higher growth, particularly in South Korea. , said Wee Khoon Chong, Asia Pacific market strategist at BNY in Singapore. “Asian currencies are cheap, but beware of the falling knife.”

In commodities, oil firmed after a weekly decline as traders weighed Trump’s threat to restore US power over the Panama Canal.

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This week, the Reserve Bank of Australia will release the minutes of its policy meeting after making the pivot, while Tokyo’s inflation reading, a harbinger of broader Japan, is due. Singapore inflation data and UK growth readings are also scheduled for release.

Important events this week:

• Singapore CPI, Monday
• Taiwan’s industrial production, unemployment rate, Monday
• UK GDP, Monday
• The Bank of Canada is releasing a summary of the discussions on Monday
• Mexico trade, Monday
• The RBA publishes the minutes of its Dec. rate meeting on Tuesday
• Christmas Day, Wednesday
• Bank of Japan Governor Kazuo Ueda addresses the Keidanren council, Wednesday
• First US claims of no use, Thursday
• The central bank of Colombia publishes the minutes of the rate meeting, Thursday
• Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
• The BOJ publishes a summary of its December meeting on Friday
• A South Korean court will hold the first impeachment hearing against President Yoon Suk Yeol over his declaration of martial law on Friday.
• Unemployment in Brazil, Friday

Some of the main steps in the market:

Shares

• S&P 500 futures were up 0.3% as of 9:19 a.m. Tokyo time
• Hang Seng futures up 1%
• Japan’s Topix rose 0.4%
• Australia’s S&P/ASX 200 rose 0.7%
• Euro Stoxx 50 futures down 0.2%
• Nasdaq 100 futures rose 0.3%

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Funds

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0435
• The Japanese yen was little changed at 156.44 per dollar
• The offshore yuan was little changed at 7.2888 per dollar
• The Australian dollar was little changed at $0.6255

Cryptocurrencies

• Bitcoin fell 0.5% to $94,657.11
• Ether fell 0.6% to $3,262.68

Bonds

• The yield on 10-year Treasuries was little changed at 4.53%
• Australia’s 10-year yield fell seven basis points to 4.42%

Goods

• West Texas Intermediate crude rose 0.2% to $69.63 a barrel
• Local gold had changed little

This story was produced with the help of Bloomberg Automation.

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