Asian shares advanced with US and Europe futures on Thursday, extending a rally on Wall Street after Federal Reserve Chair Jerome Powell said the central bank had made progress in its battle against inflation.
(Bloomberg) — Asian shares advanced with US and Europe futures on Thursday, extending a rally on Wall Street after Federal Reserve Chair Jerome Powell said the central bank had made progress in its battle against inflation.
A benchmark of Asian stocks climbed about 0.7%, with Hong Kong-listed technology companies among the top performers. The picture was more mixed in Japanese and mainland China markets, while Adani Group companies led the Indian market lower.
The dollar continued its decline against both Group-of-10 and emerging-markets currencies. A gauge of the greenback’s strength was at the lowest level since April as global investors position for a potential peak in US interest rates.
Treasury yields held a drop from the US session of about 10 basis points in key maturities across the 2-10 year zone. Australian and New Zealand bonds broadly tracked the closing moves in Treasuries Wednesday. Japan’s benchmark 10-year yield steadied two basis points below the central bank’s 0.5% ceiling
Powell’s comment that the “disinflation process has started” suggested that the aggressive tightening cycle is starting to have its desired effect of reducing the pace of price growth, helping the S&P 500 jump more than 1%. The tech-heavy Nasdaq 100 outperformed major benchmarks, closing at the highest since September.
Positioning in US swaps markets assumes the Fed is getting closer to cutting rates as traders bet that economic conditions are likely to keep it from the additional rate increases that policymakers still anticipate.
“I think market took what Powell didn’t say and ran with it,” said Karen Jorritsma, head of Australian equities at RBC Capital Markets. “He was pretty clear that he would stay on a restrictive stance as long as was needed and that some signs are coming through in the data although unemployment was at a 50-year low.”
Adding to the positive tone for risk taking, in US after-hours trading, Meta Platforms Inc. surged, leading social-media stocks higher, after reporting better-than-expected sales during the holiday quarter.
“US sector performance was consistent with the big rally in fixed income across the curve, which for Asia-Pacific should support duration proxies like tech and soft landing beneficiaries like consumer discretionary,” said Chamath De Silva, senior portfolio manager for BetaShares Holdings.
The Adani Group’s deepening crisis continued to rumble through markets on Thursday. Adani Enterprises Ltd. tanked as much as 10% in early Mumbai trading, after the company said it abandoned its follow-on share sale to insulate investors in the offering from potential losses. The other nine stocks in the group also fell.
Bonds of the Indian billionaire Gautam Adani’s flagship firm plunged to distressed levels in US trading.
Elsewhere in markets, oil staged a partial rebound after slumping on Wednesday as the dollar fell and traders weighed the potential for better demand in China.
Gold hovered around a nine-month high and Bitcoin hit the highest since August in the wake of Fed decision.
Later Thursday, central banks in Europe will be center stage with both the European Central Bank and the Bank of England expected to raise rates by half a percentage point each.
Key events this week:
- Eurozone ECB rate decision, President Christine Lagarde press conference, Thursday
- UK BOE rate decision, Thursday
- US factory orders, initial jobless claims, US durable goods, Thursday
- Earnings Thursday include: Alphabet, Apple, Amazon, Qualcomm and Deutsche Bank and Santander
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 1:07 p.m. Tokyo time. The S&P 500 rose 1.1%
- Nasdaq 100 futures rose 0.9%. The Nasdaq 100 rose 2.2%
- Japan’s Topix fell 0.5%
- Australia’s S&P/ASX 200 rose 0.1%
- Hong Kong’s Hang Seng rose 0.4%
- The Shanghai Composite rose 0.3%
- Euro Stoxx 50 futures rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.1017
- The Japanese yen rose 0.4% to 128.51 per dollar
- The offshore yuan was little changed at 6.7169 per dollar
- The Australian dollar was little changed at $0.7142
Cryptocurrencies
- Bitcoin rose 0.7% to $23,855.54
- Ether rose 2.3% to $1,672.83
Bonds
- The yield on 10-year Treasuries was little changed at 3.41%
- Japan’s 10-year yield was unchanged at 0.48%
- Australia’s 10-year yield declined six basis points to 3.51%
Commodities
- West Texas Intermediate crude rose 0.9% to $77.06 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rheaa Rao, Isabelle Lee, Georgina Mckay and Matthew Burgess.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.