Stocks in Asia rose, tracking similar gains in the US as investors continued to weigh the potential for a soft landing given expectations for higher interest rates.
(Bloomberg) — Stocks in Asia rose, tracking similar gains in the US as investors continued to weigh the potential for a soft landing given expectations for higher interest rates.
An Asia equity benchmark was set to snap a two-day decline, with the Kospi index taking the lead. The Hang Seng Index climbed as Hong Kong dropped its mask mandate, removing the last vestige of the city’s economy-damaging Covid restrictions.
US contracts ticked higher following a 0.3% advance for the S&P 500 and a 0.7% gain for the tech-heavy Nasdaq 100 on Monday. The rebound comes after recent selloffs sparked by rate-hike fears.
“As the tightening of US monetary policy is being smoothly priced in, some investors might start to take more risk,” said Hideyuki Ishiguro, a senior strategist at Nomura Asset Management. “Growth stocks such as semiconductor-related names might rise, while value stocks such as financials are likely to fall.”
The next key agenda in Asia is China’s National People’s Congress, due to kick off this weekend. Investors are looking for more pro-growth measures that could revive the China stock rally. Abrdn plc said the firm is more positive on Chinese onshore shares versus offshore peers due to potential policy windfall.
Strategists at Goldman Sachs Group Inc. said stocks in Japan and Europe may outperform the US peers, adding that earnings growth should support Chinese stocks.
Meanwhile, traders are now pricing US rates to peak at 5.4% this year, compared with about 5% just a month ago. Federal Reserve Governor Philip Jefferson firmly stood by the central bank’s 2% inflation goal on Monday. A series of hawkish Fed speak this month has trimmed January’s gains across markets.
The Bloomberg Dollar Spot Index was little changed, after falling 0.3% on Monday. The Australian dollar outperformed among the Group-of-10 currencies after the nation’s retail sales beat estimates.
Treasury yields ticked higher after the 10-year yields fell three basis points on Monday as the benchmark pulled back from the 4% mark. Yields on Australian and New Zealand 10-year bonds fell.
US data on Monday further outlined the challenge facing the central bank. Pending home sales increased in January by the most since June 2020. Durable goods orders fell, but after accounting for a drop in transportation equipment rose more than expected. Orders placed with factories for business equipment also rose.
Back in Asia, investors are keeping a close eye on Adani Group shares as the conglomerate continues an investor roadshow in the region. Executives said in sessions on Monday that it has enough money to repay debts for the next three years in addition to an $800 million cash pile.
Developer China Evergrande Group has yet to reach an agreement with major creditors on a debt restructuring framework as key deadlines loom. The company, which is at the epicenter of China’s real estate crisis, has said it wanted to get support from the noteholders by early March and it faces a March 20 court hearing in Hong Kong on a winding-up petition.
Read More: Traders See US Economy as a Balloon Directed by Multiple Forces
Elsewhere, oil was set for a fourth straight monthly decline as concerns about tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in China. Gold headed for its worst month since the middle of 2021.
Key events this week:
- US wholesale inventories, Conf. Board consumer confidence, Tuesday
- China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday
- Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- Eurozone CPI, unemployment, Thursday
- US initial jobless claims, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 12:03 p.m. Tokyo time. The S&P 500 rose 0.3%
- Nasdaq 100 futures rose 0.3%. The Nasdaq 100 rose 0.7%
- Japan’s Topix index rose 0.3%
- South Korea’s Kospi index rose 1%
- Hong Kong’s Hang Seng Index rose 0.6%
- China’s Shanghai Composite Index rose 0.2%
- Australia’s S&P/ASX 200 Index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0594
- The Japanese yen was little changed at 136.28 per dollar
- The offshore yuan rose 0.1% to 6.9521 per dollar
Cryptocurrencies
- Bitcoin rose 0.2% to $23,442.38
- Ether rose 0.2% to $1,630.19
Bonds
- The yield on 10-year Treasuries was little changed at 3.92%
- Australia’s 10-year yield declined two basis points to 3.86%
Commodities
- West Texas Intermediate crude rose 0.2% to $75.85 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, Winnie Hsu, Abhishek Vishnoi and Akshay Chinchalkar.
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