A gauge of Asian equities headed for its second weekly gain, boosted by optimism over potential economic stimulus in China and the S&P 500 entering a bull market.
(Bloomberg) — A gauge of Asian equities headed for its second weekly gain, boosted by optimism over potential economic stimulus in China and the S&P 500 entering a bull market.
Shares in mainland China and Hong Kong traded in tight ranges as a decline in Chinese producer prices and tepid consumer-price inflation bolstered speculation the government will have to do more to support the economy.
Japanese stocks snapped a two-day decline, while those in Australia advanced for the first time in four days. South Korean equities headed for the highest close since June last year.
“You need to see a much higher growth rate in China versus the US in order to justify moving back into China given the geopolitical risks and the lack of policy stimulus,” Thomas Taw, head of Asia Pacific iShares investment strategy at BlackRock, said in an interview with Bloomberg Television.
US stock futures inched lower in Asia, while Treasuries were little changed after rising on Thursday. Government bonds gained in Australia and New Zealand.
A jump in US jobless claims to the highest since October 2021 suggests the labor market is starting to cool, which helped to fuel tech stocks. They had faced headwinds from speculation of the Federal Reserve keeping interest rates higher for longer.
The S&P 500 added 0.6% and the tech-heavy Nasdaq 100 rose 1.3% on Thursday with chipmakers including Nvidia Corp. and Advanced Micro Devices Inc. among the biggest gainers amid the frenzy in stocks linked to artificial intelligence.
Fed Outlook
Investors are reassessing the trajectory of Fed policy after central banks in Australia and Canada this week unexpectedly raised interest rates. Traders had fully priced in another Fed hike by July on Wednesday. However, Evercore ISI’s Krishna Guha said market moves based on those central bank actions should fade.
“The Fed is the price-setter here, the others are the price-takers, and we should not confuse the two,” Guha said. “They are raising rates in part because they think the Fed will hike once more and if they fail to match this they risk FX depreciation.”
Weaker Yen
Elsewhere in markets, the yen weakened after a rally Thursday when data showed Japan’s economy grew faster than expected in the first quarter. The offshore yuan fell following China’s producer-prices data.
The Bloomberg Commodity Index headed for its first weekly advance since April as gains in gold and iron ore helped offset a second weekly slide in oil, which shrugged off Saudi Arabia’s pledge to cut output.
The Turkish lira weakened after the country’s President Recep Tayyip Erdogan named Hafize Gaye Erkan, a former executive of Goldman Sachs Group Inc. and First Republic Bank as the new central bank governor. There are indications the new economic team is abandoning a costly intervention strategy as part of an expected turn toward more conventional policies.
Stocks
- S&P 500 futures were little changed as of 12:49 p.m. Tokyo time. The S&P 500 rose 0.3%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.3%
- Japan’s Topix rose 1.4%
- Australia’s S&P/ASX 200 rose 0.4%
- Hong Kong’s Hang Seng rose 0.3%
- The Shanghai Composite was little changed
- Euro Stoxx 50 futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0779
- The Japanese yen fell 0.2% to 139.25 per dollar
- The offshore yuan fell 0.2% to 7.1334 per dollar
Cryptocurrencies
- Bitcoin fell 0.6% to $26,497.75
- Ether fell 0.8% to $1,838.25
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.73%
- Japan’s 10-year yield was unchanged at 0.435%
- Australia’s 10-year yield declined six basis points to 3.95%
Commodities
- West Texas Intermediate crude fell 0.6% to $70.88 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Carly Wanna, Isabelle Lee and Rob Verdonck.
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