Asian equities are set to open the week with a tailwind from US stocks closing at the highest in a month as easing inflation expectations fuel January’s global share rally.
(Bloomberg) — Asian equities are set to open the week with a tailwind from US stocks closing at the highest in a month as easing inflation expectations fuel January’s global share rally.
Shares climbed in South Korea and Australia, while futures for Hong Kong pointed higher after an index of US-listed Chinese stocks ended Friday at the strongest level since July.
Japan painted a different picture with stocks opening lower as the yen’s rebound continued to weigh on exporters. Investors also remain on guard for another surprise from the country’s central bank when it sets policy on Wednesday.
The dollar was fractionally lower against most of its Group-of-10 currency counterparts early on Monday, reflecting appetite for riskier assets. Bitcoin traded just below $21,000 following a rebound over the weekend, when it surged beyond that level amid optimism that it may have bottomed.
Bond yields rose in Australia and New Zealand. There will be no trading in Treasuries, with US financial markets closed for a holiday. The 10-year US yield climbed back to 3.50% on Friday.
One of the first cues for traders in Asia will come from the People’s Bank of China’s medium-term lending facility, with the median estimate in a Bloomberg survey of analysts indicating a liquidity boost could help alleviate a cash crunch as the week-long Lunar New Year holidays approach.
Investors have continued to pour money back into Chinese technology stocks, though they remain wary of regulatory risks and the impact of surging Covid infections. The World Health Organization has urged China to share more detailed information on the spread of virus after the government’s announcement of almost 60,000 related deaths in a month.
Ahead of Monday’s US holiday, the S&P 500 crossed its 200-day moving average and finished within a hair of 4,000. JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co., which reported results, pushed higher. The Nasdaq 100 climbed for a sixth straight day, the longest winning run since November 2021 — the month when it hit an all-time high.
Data last week added to optimism that the Federal Reserve may be able to slow the pace of interest rate hikes. Among the latest batch on Friday, US short-term inflation views fell in early January to the lowest in nearly two years, providing a bigger-than-expected boost to consumer sentiment.
Fed Bank of Atlanta President Raphael Bostic told CBS News he’s leaning toward supporting a smaller rate hike at the next meeting following Thursday’s report showing a further slowing in prices.
A host of Fed officials will be speaking this week, providing more clues for investors. The World Economic Forum’s annual meeting kicks off in Davos, Switzerland, with speakers there including European Central Bank President Christine Lagarde and the International Monetary Fund’s Kristalina Georgieva.
The busy week will also be punctuated by more corporate earnings, such as Wall Street heavyweights Goldman Sachs Group Inc. and Morgan Stanley.
Elsewhere in markets, iron ore declined after China pledged to tighten supervision on pricing after the metal’s surge in recent months. Oil and gold were steady as the week’s trading kicked off.
Key events this week:
- Earnings this week are scheduled to include: Charles Schwab, Discover Financial, Goldman Sachs, HDFC Bank, Interactive Brokers, Investor AB, Morgan Stanley, Netflix, Procter & Gamble, Prologis, State Street
- China medium-term lending, Monday
- World Economic Forum’s kicks off in Davos, Monday
- US markets closed for Martin Luther King Jr. Day, Monday
- China retail sales, industrial production, GDP, Tuesday
- US Empire State manufacturing survey, Tuesday
- Fed’s John Williams to speak, Tuesday
- Eurozone CPI, Wednesday
- US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment, Wednesday
- Bank of Japan rate decision, Wednesday
- Federal Reserve releases Beige Book, Wednesday
- Fed speakers include Raphael Bostic, Lorie Logan and Patrick Harker, Wednesday
- US housing starts, initial jobless claims, Philadelphia Fed index, Thursday
- ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday
- Fed speakers include Susan Collins and John Williams, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- US existing home sales, Friday
- IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:07 a.m. in Tokyo. The S&P 500 rose 0.4% Friday
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.7%
- Japan’s Topix index fell 0.5%
- South Korea’s Kospi index rose 0.3%
- Australia’s S&P/ASX 200 Index rose 0.7%
- Hong Kong’s Hang Seng futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.0830
- The Japanese yen fell 0.1% to 128.02 per dollar
- The offshore yuan rose 0.1% to 6.7066 per dollar
Cryptocurrencies
- Bitcoin was little changed at $20,903.14
- Ether rose 0.3% to $1,557
Bonds
- The yield on 10-year Treasuries advanced six basis points to 3.50% on Friday
- Australia’s 10-year bond yields rose three basis points to 3.62%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was at $1,917.66 an ounce
This story was produced with the assistance of Bloomberg Automation.
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