Dec 20, 2023
Asian Stocks Advance To Track Wall Street's Rally: Markets Wrap
(Bloomberg) -- Stocks in Asia gained after Wall Street extended its rally on Tuesday, with traders shrugging off warnings from policymakers trying to rein in expectations for Federal Reserve rate cuts. (Bloomberg) -- Stocks in Asia gained after Wall Street extended its rally on Tuesday, with traders shrugging off warnings from policymakers trying to rein in expectations for Federal Reserve rate cuts. Hong Kong equity gauges rose at the open, while benchmarks in Japan, South Korea and Australia also advanced. The Nasdaq 100 and blue-chip Dow Jones Industrial Average set all-time highs Tuesday, while the S&P 500 added 0.6%, fast approaching a record. Atlanta Fed President Raphael Bostic said there was no urgency to lower rates but this did little to dent market expectations. Speculation of Fed easing is making investors the most optimistic since the beginning of 2022, a Bank of America Corp. survey showed Tuesday. Traders have also been liquidating bets on higher short-term US yields as investors reel back from the urge to fight the dovish pivot. Treasury 10-year yields slipped two basis points to 3.91% after consolidating the previous day. Emerging Asian currencies such as South Korea’s won, the Malaysian ringgit and Thai baht rose on the back of a weaker dollar. Chinese banks held their benchmark lending rates on Wednesday, following the central bank’s decision to skip cutting policy interest rates earlier this month. “A softer USD, softer European yields and a sweet rally on Wall Street overnight to reference off set the stage for a sweet start,” said Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. in Singapore. “A softer JPY on the back of BOJ pushback firing up Nikkei was also sweet for equity bulls in Asia to mark off the rallies in US.” Japan’s exports slipped for the first time in three months in November, in a fresh sign that the economic recovery is sputtering. Meanwhile, the Bank of Japan’s decision to hold the world’s last negative interest rate drove the yen down for a fourth day, the longest losing streak since mid-November. The currency tumbled by the most since late October on Tuesday. The yield on Japan’s 10-year government bond dropped below 0.6% for the first time since August, as speculation eased about the central bank’s near-term exit from its negative interest rate. Richmond Fed President Thomas Barkin reinforced the more dovish tone, suggesting the US central bank would lower interest rates if recent progress on inflation continued. However, other policymakers have pushed back more aggressively against rate cut bets. Chicago Fed President Austan Goolsbee and the Cleveland Fed’s Loretta Mester suggested Monday that the expectations were premature. The Fed’s messaging drew criticism from economist Mohamed El-Erian who warned that the central bank was letting the market control the narrative on interest rates. Investors are waiting for data readouts from the US, including Wednesday’s existing home sales, Thursday’s third quarter gross domestic product print and Friday’s durable goods orders and personal consumption expenditures — the Fed’s preferred measure of inflation — to firm up their rate bets. Data on Tuesday showed an unexpected surge in new US home construction in November as builders continued to benefit from a limited supply of existing home sales. Oil rose a third day as traders and shippers braced for the prospect of more disruption in the Red Sea. Gold edged lower. Axioma Head of APAC Applied Research Olivier d’Assier discusses his market outlook and investment strategies. He speaks with Shery Ahn on “Daybreak Asia”.Source: Bloomberg Key events this week: UK inflation, Wednesday US Conference Board consumer confidence, existing home sales, Wednesday Bank Indonesia rate decision, Thursday US GDP, initial jobless claims, Conf. Board leading index, Thursday Nike earnings, Thursday Japan inflation, Friday UK GDP, Friday US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday Some of the main moves in markets: Stocks S&P 500 futures were little changed as of 10:22 a.m. Tokyo time. The S&P 500 rose 0.6% Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.5% Japan’s Topix index rose 1% Australia’s S&P/ASX 200 Index rose 0.6% Hong Kong’s Hang Seng rose 0.9% Euro Stoxx 50 futures rose 0.1% Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.0974 The Japanese yen was little changed at 143.81 per dollar The offshore yuan fell 0.1% to 7.1292 per dollar The Australian dollar fell 0.2% to $0.6752 Cryptocurrencies Bitcoin fell 0.1% to $42,433.43 Ether fell 0.1% to $2,182.6 Bonds The yield on 10-year Treasuries declined two basis points to 3.91% Japan’s 10-year yield declined 6.5 basis points to 0.570% Australia’s 10-year yield declined four basis points to 4.07% Commodities West Texas Intermediate crude rose 0.1% to $74.04 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation. --With assistance from Cristin Flanagan and Rob Verdonck. More stories like this are available on bloomberg.com ©2023 Bloomberg L.P.






