Asian shares opened higher after US stocks rose for a fourth day as traders shrugged off a hotter-than-estimated wholesale inflation reading.
Benchmark indexes climbed around 0.7% at the open in Japan and South Korea, while Australian stocks held on to small gains. Investors took courage on less hawkish comments from Federal Reserve speakers even as a measure of producer prices in the US rose by more than forecast in September.
Boston Fed President Susan Collins said Wednesday officials are taking a more patient approach now that rates are at or near their peak. Her Atlanta counterpart Raphael Bostic said the central bank doesn’t need to keep tightening unless inflation’s descent starts to stall. Meanwhile, Governor Christopher Waller noted the Fed can “watch and see” what happens before taking further action with rates as financial markets tighten.
Futures for benchmarks in Hong Kong and the US also advanced after the S&P 500 had capped the longest winning streak since August on Wednesday on the back of the Fed officials’ comments.
In Asia, traders will be keeping an eye on China stocks after the nation’s sovereign wealth fund increased its stake in the nation’s biggest banks for the first time since 2015 on Wednesday. The announcement will likely keep speculation high about broader support and more government efforts to rescue the stock market.
Treasuries were little changed in early trading hours in Asia after delivering mixed results Wednesday with long-dated tenors holding most of their advances. Australian 10-year bonds headed for a sixth day of gains on Thursday.
The yen remained firm at around 149 on the dollar, which weakened against all of its Group-of-10 peers.
Restrictive Policy
Investors now await Thursday’s US consumer price index with policymakers recently noting that the risks of overtightening now had to be balanced against keeping inflation on a downward path toward 2%.
Fed minutes Wednesday showed that central bank officials agreed last month that US policy should remain restrictive for “some time” to keep cooling down inflation — while noting risks had become more balanced.
“The Fed is near the end of their rate hiking campaign and the events of the past weekend likely solidify this view,” said Jeffrey Roach, chief economist at LPL Financial. “The risk of overtightening appears to be in balance with the risk of insufficient tightening.”
Meanwhile, Wall Street analysts are boosting US earnings forecasts even before results start rolling in, signaling the worst of the profit slump is likely over as ebbing inflation eases the pressure on a broad swath of industries.
JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. will kick off the earnings season Friday, with the biggest US banks poised to write off more bad loans than they have since the early days of the pandemic as higher-for-longer interest rates and a potential economic downturn put borrowers in a bind.
Key events this week:
- Bank of Japan’s Asahi Noguchi speaks, Thursday
- UK industrial production, Thursday
- US initial jobless claims, CPI, Thursday
- European Central Bank publishes account of September policy meeting, Thursday
- Fed’s Raphael Bostic speaks, Thursday
- China CPI, PPI, trade, Friday
- Eurozone industrial production, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
- G20 finance ministers and central bankers meet as part of IMF gathering, Friday
- ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
- Fed’s Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 9:28 a.m. Tokyo time. The S&P 500 rose 0.4%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.7%
- Japan’s Topix rose 0.9%
- Australia’s S&P/ASX 200 rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0623
- The Japanese yen was little changed at 149.13 per dollar
- The offshore yuan was little changed at 7.2994 per dollar
- The Australian dollar was little changed at $0.6417
- The British pound was unchanged at $1.2313
Cryptocurrencies
- Bitcoin rose 0.4% to $26,824.84
- Ether was little changed at $1,564.2
Bonds
- The yield on 10-year Treasuries was little changed at 4.55%
- Australia’s 10-year yield declined nine basis points to 4.34%
Commodities
- West Texas Intermediate crude fell 0.5% to $83.05 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rita Nazareth.
