Small gains for shares in Asia signaled a muted optimism Thursday as investors looked beyond the debt ceiling to instead consider the prospect of a Federal Reserve pause in June.
(Bloomberg) — Small gains for shares in Asia signaled a muted optimism Thursday as investors looked beyond the debt ceiling to instead consider the prospect of a Federal Reserve pause in June.
Japanese stocks and US equity futures advanced while shares in Australia and South Korea were flat in early trading. The broadly positive start comes after the region’s equities fell more than 1% Wednesday against the backdrop of worries about Chinese growth. Manufacturing data for China due Thursday is forecast to show a further contraction in activity.
The rise in US contracts followed declines on Wednesday and suggests investors were taking cues from Federal Reserve officials who backed the possibility the central bank will pause rate hikes in June.
Federal Reserve Governor Philip Jefferson said the central bank is inclined to keep interest rates steady in June to assess the economic outlook. His remarks were echoed by Philadelphia Fed President Patrick Harker, who said: “I think we can take a bit of a skip for a meeting.”
The S&P 500 closed 0.6% lower Wednesday, narrowly clinging to a small gain for May to mark three consecutive monthly advances. The Nasdaq 100 index fell 0.7%, weighed down by a decline for Nvidia Corp. shares after a rapid rally that has tripled the stock price this year.
Australian and New Zealand bond yields inched lower, following a decline in Treasury yields. The dollar was lower against major currencies after strengthening on Wednesday.
Hopes for a Fed pause were partly pared back after the JOLTS jobs report for April showed more than 10 million openings, the highest in three months and above consensus estimates.
Traders also watched the latest developments in the US debt-ceiling saga. The deal struck by House Speaker Kevin McCarthy and President Joe Biden cleared a major hurdle in the House, lining the compromise legislation up for passage as the US quickly approaches a June 5 deadline to avert a default.
“Those planning for a relief rally following the passage of the debt ceiling increase may be disappointed,” said Mark Hackett, chief of investment research at Nationwide. “The next move higher for equities will require improving data and a shift in investor confidence.”
Corporate earnings were again in focus. Shares in Salesforce Inc. tumbled around 7% in afterhours trading following a dim outlook for sales while Hewlett Packard Enterprise Co. fell 7.1% Wednesday on slimmer revenue projections than anticipated.
Elsewhere, West Texas Intermediate crude deepened its slide below $70 a barrel. ICE Brent futures were also lower.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:35 a.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 0.7%
- Hang Seng futures fell 0.2%
- Nikkei 225 futures (OSE) rose 0.8%
- Japan’s Topix rose 0.7%
- Australia’s S&P/ASX 200 was little changed
- Euro Stoxx 50 futures rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0690
- The Japanese yen was little changed at 139.31 per dollar
- The offshore yuan was little changed at 7.1185 per dollar
- The Australian dollar was little changed at $0.6501
- The British pound was little changed at $1.2442
Cryptocurrencies
- Bitcoin rose 0.3% to $27,201.55
- Ether rose 0.7% to $1,879.02
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.63%
- Japan’s 10-year yield was little changed at 0.430%
- Australia’s 10-year yield declined four basis points to 3.57%
Commodities
- West Texas Intermediate crude fell 0.5% to $67.72 a barrel
- Spot gold rose 0.2% to $1,966.38 an ounce
This story was produced with the assistance of Bloomberg Automation.
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