As investors wagered that the US Federal Reserve would cut rate of interest as early as March, shares increased throughout Asia following Wall Street gains that brought the S&P 500 closer to its all-time high. With a 1.1% increase, the MSCI Asian Pacific Index closed at its highest level in more than four months.
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After the Christmas break, Hong Kong stocks rose as well, driven by Chinese tech companies. This came after Beijing loosened its rules on the gaming sector in response to a stock selloff that was generated by proposed restrictions. Mainland China’s stocks recovered from their earlier losses when data revealed that the industrial profits of the nation were growing faster than before, aided by positive base effects.
Following the S&P 500’s Tuesday closing inside 0.5% of its track high, which was set early in the year when rates of interest were still at pandemic lows, US futures were almost flat. As the market prices in a forceful path of Fed easing in 2024, 10-year bond yields fell 2 framework points throughout Asia trading after Tuesday’s auctions attracted buyers. In comparison to most major currencies, the dollar is stable.
US markets will rise for the rest of the week, following Asia’s recent trend, according to Redmond Wong, an analyst at Saxo Bank Limited in Hong Kong. “Hong Kong’s rally might not last long, and China as well as Hong Kong are likely to keep on to lag.” As markets reopen following a long weekend, Australia’s S&P/ASX 200 index reached its greatest day-to-day stage since April 2022, driven by obtains in workers amid rising metals prices.
During the session last week, Bank of Japan executives discussed when to end the negative rate policy. Several of them indicated they were in no rush to make the decision. As a result, Japan’s Nikkei 225 index increased by more than 1%, heading towards a closing level close to its 34-year high. Following the announcement of the summary, the yen declined and the yields on Japanese government bonds decreased.
Major tech stocks in Hong Kong recovered somewhat from Friday’s $80 billion sell-off after officials indicated they would be open to easing the contentious new gaming regulations. While smaller competitor NetEase increased by more than 14%, Tencent increased by as much as 6.2%.
US stocks have gained 4.5% so far this month, bringing their total gain since the year’s beginning to 24%. MSCI’s all-country rating is 4.5% below its record set in November 2021, while the US as well as Australian indexes are closing in on all-time highs and the Indian gauges are nearing all-time highs from earlier this month. The MSCI the Asia-Pacific region Index is still 25% below its peak from February 2021, indicating that Asia is a lagging region.
In other news, oil reversed gains following escalating tensions in the eastern Mediterranean region, as ships avoided the vital shipping route in the Red Sea due to a recent attack. As traders evaluated how cryptocurrency markets might respond if regulators live up to expectations and approve the inaugural US exchange-traded fund to start putting directly in the token, gold saw a slight decline and Bitcoin saw a retreat. In the business sector, SoftBank Group announced it will acquire $7.6 billion worth of T-Mobile US stock at no additional cost, leading to the largest day-to-day gain since June 13.
Important happenings this week:
- Japan’s retail sales and industrial production on Thursday
- US wholesale inventories and initial claims for unemployment on Thursday
- house prices nationwide in the UK, Friday
Among the principal market movements are:
Stocks
- As of 1:49 p.m., S&P 500 futures had not moved significantly. Tokyo time.
- The Nasdaq 100 futures showed minimal movement.
- Topix in Japan increased 1%.
- S&P/ASX 200 in Australia increased 0.9%.
- The Hong Seng saw a 1.5% increase.
- The Shanghai Composite increased by 0.4%.
- EUR Stoxx 50 futures increased by 0.4%.
Currency
- Little changed in the Bloomberg Dollar spots Index
- The euro was barely moved, trading at $1.1041.
- The Japanese yen dropped 0.2% to $142.66.
- The offshore yuan dropped to 7.1503 per dollar, down 0.1%.
- The Australian dollar increased to $0.6834, up 0.1%.
Digital Money
- Bitcoin dropped to $42,283.42 by 0.1%.
- Up 0.2% to $2,220.29, ether
Bonds
- Ten-year Treasury yields decreased by two framework points to 3.88%.
- The yield on Japan’s 10-year note dropped 2.5 foundation points to 0.605%.
- Australia’s 10-year yield dropped to 3.98%, down three basis points.
Goods and Services
- At $75.40 per barrel, West Texas Intermediate oil dropped 0.2%.
- Spot gold dropped 0.1% to an ounce for $2,064.97.
Today’s markets: U.S. stocks rise as the economy begins to cool.
U.S. stocks increased following data released on Thursday that suggested the economy was expanding, confirming predictions that the Federal Reserve would cut interest rates further.
After being knocked off record highs by Wednesday’s selling spree, the stock market’s Nasdaq 100 index gained 0.9%. The benchmark is on course for its eighth straight weekly advance, marking the longest winning run in over five years, as the S&P 500 increased by 0.7%.
Micron Technologies Inc. as well as Cintas Corp. were among the top gainers, rising more than 6% each following quarterly revenue that exceeded projections. Morgan Stanley predicted that Salesforce Inc. would reach a record high, which gave the software company a boost.
As the coupon rate on the US two-year bond remained at 4.34 percent and the revenue on the 10-year bond increased to 3.87 percent, the worldwide bond rally began to fade.
The third predict of the figures released by the government on Thursday revealed that the gross domestic product had been revised lower to an annualised rise of 4.9% in the third quarter, below the predictions of economists. US unemployment insurance applications increased last week, but less than expected, and they are still very close to all-time lows.
The Fed will continue to cut interest rates in the near future due to a cooling economy, according to the numbers, according to Chris Larkin, the managing director of investing and trading at E*Trade to Morgan Stanley. “Whether accurate or not, that sentiment has contributed significantly to the market’s recent rise, despite the Fed’s best efforts to lower expectations.”
Swaps traders are placing bets based on the data that the US Federal Reserve will cut interest rates by roughly six quarter points by the end of the year, significantly sooner than the three policymakers indicated last week.
Some market observers attributed Wednesday’s decline in U.S. stocks to options known as zero-day, or ODTE, contracts, pointing out that large volumes of “put” contracts probably caused option holders to sell the underlying stocks. However, many contend that these speed bumps won’t last long given the larger picture of declining inflation and rate-cut bets.
Investors should “expect fluctuation in advance, but with an ultimately Fed turn as a north star,” according to strategists at Citigroup Inc. They also suggested buying into pullbacks.
Whilst cautioning that the Federal Reserve should not act “right away” or too quickly, Philadelphia Fed leader Patrick Harker strengthened the case for rate cuts on Wednesday.
The results of Nike Inc., which are expected after market close, should shed light on the situation of American consumers. The core personal consumption expenditures price index, which is the preferred inflation indicator of the Fed, along with U.S. consumer sentiment and GDP data from the United Kingdom are all released on Friday.
Following three days of benefits, oil prices in commodities fell as the possibility of Houthi assaults on boats across one of the world’s most significant waterways was lessened by rising U.S. production.
The US dollar started to weaken again on Thursday, losing ground against every member of the Group of 10.
Important happenings this week:
- Nike’s quarterly results, Thursday
- Japan’s inflation on Friday
- Friday’s GDP for the UK
- U.S. consumer spending and income, sales of new homes, durable goods, Friday’s consumer sentiment index from the University of Michigan
Among the principal market movements in US are:
Stocks
- As about 11:38 a.m. in New York City time, the S&P 500 was up 0.8%.
- The Nasdaq 100 increased by 1%.
- The benchmark index, the Dow Jones Industrial Average, increased by 0.6%.
- The FTSE Europe 600 decreased by 0.2%.
- 5.5% was added to the MSCI World index.
Currency
- A 0.5% decline was seen in the Bloomberg Dollar spots Index.
- The euro increased by 0.4% to $1.0991.
- The British pound increased by 0.263% to $1.2663.
- The Japanese yen increased by 1% to 142.11 against the US dollar.
Digital Money
- Bitcoin increased by 0.5% to $43,651.38.
- Ether increased 2.2% to $2,226.48 in bonds.
- The yield on a 10-year Treasury yields increased to 3.87 percent, up two basis points.
- The 10-year yield on German bonds decreased by a single basis percentage point to 1.96 percent.
- The 10-year yield for Britain remained relatively unchanged at 3.52%.
Goods and Services
- Crude oil prices for West Texas Intermediate dropped 0.9% to $73.53 per barrel.
- Spot gold increased by 0.6% to $2,043.39 per ounce.
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