Stocks in Asia extended choppy trading on Wall Street as investors balanced hot inflation data with Federal Reserve commentary suggesting US interest rates may soon peak.
(Bloomberg) — Stocks in Asia extended choppy trading on Wall Street as investors balanced hot inflation data with Federal Reserve commentary suggesting US interest rates may soon peak.
Stocks in Japan and futures in Hong Kong inched higher while Australian shares fell. Contracts for the S&P 500 also declined after the benchmark ended Tuesday flat. Nasdaq 100 futures also fell after the index, which is more sensitive to higher interest rates, rose 0.7% on Tuesday.
Australian and New Zealand bond yields climbed higher. The two-year Treasury yield rose further after adding 10 basis points Tuesday to touch the highest level since November. The 10-year Treasury benchmark rose to levels not seen since the start of the year.
The moves were driven by US CPI data that showed prices rose 0.5% in January, more than the 0.4% forecast by economists, and subsequent comments from policy makers.
Federal Reserve Bank of Philadelphia President Patrick Harker said the the Fed was nearing the point where rates were restrictive enough. “In my view, we are not done yet,” he said. “But we are likely close.”
Harker’s Richmond Fed counterpart Thomas Barkin told Bloomberg TV that the central bank might “have to do more”to fight inflation and Dallas Fed President Lorie Logan said rate increases could last “for a longer period than previously anticipated.”
Equity bulls were also encouraged by one falling component of the CPI print. Core services minus housing, a measure singled out by Fed Chair Jerome Powell in the past, came in at a slower 0.3% pace in the month.
“Stocks are probably rising due to Harker,” said Steve Sosnick, chief strategist at Interactive Brokers. “Close to done on tightening is vague, but certainly not a hawkish tone.”
The dollar was largely unchanged and the yen strengthened after weakening over the prior two days. Oil fell for a second day after the announcement that the US was selling more crude from its strategic reserves.
The PBOC is expected to hold its key one-year MLF interest rate at 2.75% later today, according to consensus estimates, as Lunar New Year period numbers suggest a recovery in consumption.
Key events:
- US retail sales, UK CPI Wednesday
- US jobless claims, Australia unemployment, Cleveland Fed President Loretta Mester speaks at Global Interdependence Center event Thursday
- France CPI, Russia GDP Friday
Some of the main moves in markets as of 9:25 a.m. Tokyo time:
Stocks
- S&P 500 futures fell 0.2%. The S&P 500 was little changed
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.7%
- Hang Seng futures rose 0.1%
- Japan’s Topix rose 0.1%
- Australia’s S&P/ASX 200 fell 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0737
- The Japanese yen rose 0.2% to 132.83 per dollar
- The offshore yuan was little changed at 6.8356 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $22,168.32
- Ether fell 0.3% to $1,551.92
Bonds
- The yield on 10-year Treasuries was little changed at 3.74%
- Australia’s 10-year yield advanced six basis points to 3.80%
Commodities
- West Texas Intermediate crude fell 0.5% to $78.69 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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