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Japan Leads Asian Stocks Higher, Dollar Weakens: Markets Wrap


(Bloomberg) — Japan’s stocks led an advance in Asian equities while the dollar slipped as investors awaited US inflation data that will help clarify the path for Federal Reserve policy.

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Benchmark Japanese share gauges were poised to notch fresh three-decade highs, thanks in part to the yen’s recent weakness, while mainland China indexes held to tight ranges. US equity futures edged higher.

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“The recent rally shows that overall, both domestic individual investors and foreign investors, have been forced to change their attitude toward Japanese stocks to a more positive one,” said Ikuo Mitsui, fund manager at Aizawa Securities Co. “There is also a sense that investors who were late to the market are buying to follow the rise in the index.”

US stock futures built on Wednesday’s gains when the S&P 500 closed 0.6% higher and the tech-heavy Nasdaq 100 rose 0.7%. The moves extended a rebound in tech following heavy selling last week and come ahead of fourth-quarter earnings season, which broadly kicks off with a slew of bank results Friday. Contracts for the region-wide Euro Stoxx 50 index also gained.

The US Securities and Exchange Commission approved ETFs that directly invest in Bitcoin. The digital currency rose as much as 3.8% to trade above $47,700 early Thursday before paring gains to hover around $46,600.

Treasuries were broadly flat in Asian trading after declines in the prior session while the dollar weakened against all its Group-of-10 peers. Investors are gearing up for a bout of turbulence when the US consumer price data come out later Thursday. 

Bond traders have trimmed bets on gains for Treasuries this month, and the swaps market shows a lower chance of expected Fed cuts by March relative to pricing late last year. Economists tracked by Bloomberg expect year-over-year core inflation to fall to 3.8% in the December data from 4% in the prior month.

The data will likely fall “in line with consensus,” Matt Eagan, a portfolio manager for Loomis, Sayles & Co., said in a note. “Our expectations are for headline inflation to continue to cyclically bottom well below 3%, possibly to 2.5%, and for the Fed to then start cutting rates sometime over the next six months.”

Federal Reserve Bank of New York President John Williams said Fed officials need to see more signs of cooling in the economy before reducing interest rates, but noted current policy levels are adequate to bring inflation back to the central bank’s target.

In Asia, Australia’s trade balance for November rose more than expected as imports fell and exports grew more than consensus forecasts. Other data set for release includes consumer confidence in Japan, while December new lending and M2 money-supply data for China could be released as soon as today. South Korea’s central bank will hand down a monetary policy decision.

The offshore yuan eked out a gain as China’s central bank set its currency fixing at the strongest since November relative to estimates, in a sign of support after a recent slump.

Oil prices edged higher after weakening Wednesday on signs that rising US crude stockpiles will outweigh the effects of Red Sea tensions. Gold was little changed.

Key events this week:

Some of the main moves in markets:






This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu.

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©2024 Bloomberg L.P.


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