Asian stocks edged higher after US equities were buoyed by Wall Street scaling back wagers on Federal Reserve rate hikes. Oil steadied following its biggest rally since April.
(Bloomberg) — Asian stocks edged higher after US equities were buoyed by Wall Street scaling back wagers on Federal Reserve rate hikes. Oil steadied following its biggest rally since April.
South Korea shares climbed over 2% while Australian equities ticked higher in early trading Wednesday. Japan stocks were mostly unchanged. The S&P 500 gained for a third day, approaching the 4,400 level on Tuesday. Amazon.com Inc. rose amid its fall sale for Prime subscribers and PepsiCo Inc. climbed on a bullish forecast. Wall Street’s fear gauge, the CBOE Volatility Index or VIX, fell to a two-week low.
The Golden Dragon index of Chinese companies listed in the US climbed the most in more than a month as Bloomberg News reported the Asian nation is considering new economic stimulus.
Treasuries were little changed in early trading hours in Asia. The US government bonds rallied Tuesday after comments from Fed officials bolstered speculation the central bank is headed toward another pause in rate increases. Yields posted some of their biggest one-day declines all year, with 10-year yields tumbling 15 basis points to 4.65% as trading resumed in the cash market.
Fed swaps currently show more than 60% chance the Fed will stay on hold in December, compared with 60% odds on another hike by then, just a week ago. The dollar fell for a sixth straight day, its longest losing streak since July. West Texas Intermediate held near $86 a barrel.
The yen gained after trimming declines in the previous session after a Kyodo report said that the Bank of Japan is considering revising its inflation forecast close to 3%. Investors will be watching a five-year Japan government bond auction later Wednesday.
Read more: Fed’s Daly Says Neutral Interest Rate Could Be as High as 3% Now
Fed Bank of Atlanta President Raphael Bostic said policy is restrictive enough to lower prices to the 2% goal. His Minneapolis counterpart Neel Kashkari said he wasn’t yet convinced that a surge in long-term Treasury yields would lessen the need for further rate hikes, saying it depends on what is driving the recent rise in borrowing costs.
“Policymakers have begun to acknowledge a lesser need for further policy action given financial conditions have tightened considerably after the recent surge in Treasury yields,” said Ben Jeffery at BMO Capital Markets. “This acknowledgment may have reduced angst around the need for additional rate increases.”
Investors will be watching for any hints in the September Fed meeting minutes due Wednesday that would suggest the Fed may not follow through with the last hike indicated in its economic projections, according to Anna Wong at Bloomberg Economics. Two critical upcoming economic indicators — Thursday’s consumer price index and Friday’s University of Michigan consumer-sentiment survey — may give a more definitive read, she noted.
Read: US Consumers See Higher Near-Term Inflation, Tighter Credit
Global investors also kept a close eye on geopolitics. President Joe Biden said the US is “surging” military assistance to Israel in the wake of the Palestinian militant group Hamas’ surprise attack. The US will encourage Qatar to help facilitate conversations with Hamas about the return of American hostages seized during the weekend incursion into Israel, the White House said Tuesday.
Billionaire investor Paul Tudor Jones told CNBC the current geopolitical environment is the “most threatening and challenging” he’s ever seen in the wake of Hamas’s attack on Israel over the weekend and predicted the US will enter into a recession early next year.
Key events this week:
- Germany CPI, Wednesday
- NATO defense ministers meeting in Brussels, Wednesday
- Russia Energy Week in Moscow, with officials from OPEC members and others, Wednesday
- US PPI, Wednesday
- Minutes of Fed’s September policy meeting, Wednesday
- Fed’s Michelle Bowman and Raphael Bostic speak at separate events, Wednesday
- Japan machinery orders, PPI, Thursday
- Bank of Japan’s Asahi Noguchi speaks, Thursday
- UK industrial production, Thursday
- US initial jobless claims, CPI, Thursday
- European Central Bank publishes account of September policy meeting, Thursday
- Fed’s Raphael Bostic speaks, Thursday
- China CPI, PPI, trade, Friday
- Eurozone industrial production, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
- G20 finance ministers and central bankers meet as part of IMF gathering, Friday
- ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
- Fed’s Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:31 a.m. Tokyo time. The S&P 500 rose 0.5%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.6%
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0610
- The Japanese yen rose 0.1% to 148.53 per dollar
- The offshore yuan was little changed at 7.2841 per dollar
- The Australian dollar rose 0.1% to $0.6441
Cryptocurrencies
- Bitcoin was little changed at $27,409.54
- Ether rose 0.6% to $1,568.79
Bonds
- The yield on 10-year Treasuries was little changed at 4.65%
- Australia’s 10-year yield declined two basis points to 4.43%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Stephen Kirkland.
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