Most Asian stocks rose on Wednesday along with US equity futures as traders weighed positive regional economic data and a signal from the Federal Reserve to step up efforts to curb high inflation.
MSCI Inc.’s Asia-Pacific stock index has risen the most since mid-October. South Korea led earnings on strong export growth, while purchasing managers’ indicators pointed to the resilience of Asian manufacturing. The S&P 500, Nasdaq 100 and European futures rose, indicating stabilization after US stocks fell.
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Chairman Jerome Powell said the next Fed meeting should discuss whether to wrap up the bond purchases a few months earlier and dropped the word “transitory” to describe high inflation. That could open the door to earlier interest rate hikes. Money markets show around 60 basis points of increases at the end of 2022.
The 10-year US Treasury yield rose but remained below 1.50%. The gap between 5- and 30-year Treasury yields was the narrowest since March last year. Crude oil and commodity currencies rebounded.
Volatility is hitting markets as investors weigh whether the recovery from the pandemic can withstand declining monetary policy support and potential risks from the omicron virus variant. While central banks are reducing ultra-lax environments, financial conditions remain favorable in key economies.
The flattening of the Treasury yield curve “does not suggest imminent doom for the equity market itself,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., told Bloomberg Television. “The alarms sound in terms of recession” when the curve approaches investment, he said.
The question of raising or suspending the US debt ceiling is back on the radar. High yields on some treasury bills due in late December point to concerns that the United States will run out of borrowing capacity before the end of 2021.
Meanwhile, US President Joe Biden is expected to announce stricter testing requirements for all inbound travelers to help combat the omicron.
Some key events to watch this week:
- Eurozone Manufacturing PMI, Wednesday
- US Construction Spending, ISM Manufacturing, Fed’s Beige Book on Wednesday
- OPEC and allies may reassess plans to revive oil supplies, Thursday
- Initial Unemployment Claims in the United States, Thursday
- US Jobs Report, Factory Orders and Durable Goods on Friday
Some of the main movements in the markets:
- S&P 500 futures were up 0.9% at 7am in London. The S&P 500 fell 1.9%
- Nasdaq 100 futures were up 1.4%. The Nasdaq 100 fell 1.6%
- Japan’s Topix Index added 0.4%
- Australia’s S & P / ASX 200 Index fell 0.3%
- South Korea’s Kospi index rose 2.1%
- Hong Kong’s Hang Seng Index rose 1.1%
- China’s Shanghai Composite Index increased 0.4%
- Euro Stoxx 50 futures rose 0.9%
- The Japanese yen was at 113.58 to the dollar, down 0.4%.
- The offshore yuan was at 6.3673 to the dollar.
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $ 1.1332
- The 10-year Treasury yield rose two basis points to 1.47%.
- The yield on Australia’s 10-year bonds increased four basis points to 1.73%.
- West Texas Intermediate crude rose 2.9% to $ 68.16 a barrel
- Gold was at $ 1,787.41 an ounce, up 0.7%
© 2021 Bloomberg