Shares in Asia jumped tracking gains in US stocks and bonds after the Federal Reserve signaled its policy tightening cycle may be over.
Benchmarks in Australia, Japan and South Korea rose, while Chinese stocks also opened higher, fueling gains in a regional gauge. The moves echoed a 1.1% rally in the S&P 500 Wednesday that placed the index on track for its best week since March. US equity futures edged higher in early Asian trading.
Australian and New Zealand yields fell, mirroring a Wednesday decline in Treasury yields, which slid further Thursday. The 10-year benchmark shed 20 basis points Wednesday in a move initially triggered by the Treasury’s plans to slow the pace of increases in its long-term debt sales. The Treasury said it will sell $112 billion of long-term securities at its quarterly refunding auctions next week, slightly less than major dealers expected.
Lower Treasury yields weighed on the greenback, which weakened against major currencies, and helped buttress the yen. The Japanese currency strengthened early Thursday extending gains from Wednesday.
Fed Chair Jerome Powell left the door open for further hikes in the central bank’s Wednesday decision, but noted that financial conditions have “tightened significantly in recent months driven by higher, longer—term bond yields, among other factors”.
“We don’t expect any further hikes this cycle,” said James Knightley, chief international economist for ING Financial Markets LLC. “Higher household and corporate borrowing costs are starting to bite.”
US jobs data painted a mixed picture. There were more job openings than forecast, according to the latest JOLTS data, while ADP’s private payrolls figures showed fewer new roles than anticipated. Initial jobless claims figures will be released later Thursday.
Some observers remained cautious about the Fed’s policy path. There is “a likelihood for another 25” basis points of rate increase in the hiking cycle, Stephen Dainton, co-head of global markets at Barclays Plc, said in an interview with Bloomberg Television.
Elsewhere, the Bank of England is expected to hold rates for a second consecutive meeting Thursday, as inflation concerns ease.
Back in Asia, South Korea’s inflation unexpectedly accelerated in October, reinforcing the case for the local central bank to keep its restrictive policy in place for longer. Meantime, Japanese Prime Minister Fumio Kishida announced a larger-than-expected economic stimulus package.
Other economic releases Thursday include a monetary policy decision in Malaysia and PMI data for Singapore. Investors will also be keeping an eye on earnings releases from Tata Motors Ltd and Adani Enterprises Ltd.
Other companies due to release results include Eli Lilly & Co and Novo Nordisk, while Apple Inc will deliver its latest earnings later on Thursday in the US. Corporate highlights Wednesday included Qualcomm Inc. providing a better-than-expected revenue forecast for the current quarter while Airbnb Inc. gave a disappointing outlook for the fourth quarter.
West Texas Intermediate, the US oil benchmark, advanced more than 1% to above $81 per barrel, retracing a Wednesday decline. Gold was steady and bitcoin traded largely unchanged at around $35,500.
Key events this week:
- Eurozone S&P Global Eurozone Manufacturing PMI, Thursday
- Bank of England interest rate decision. Governor Andrew Bailey holds news conference, Thursday
- US factory orders, initial jobless claims, productivity, Thursday
- Apple earnings, Thursday
- China Caixin services PMI, Friday
- Eurozone unemployment, Friday
- US unemployment, nonfarm payrolls, Friday
- Canada employment report, Friday
Here are some of the major moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 10:34 a.m. Tokyo time. The S&P 500 rose 1.1%
- Nasdaq 100 futures rose 0.5%. The Nasdaq 100 rose 1.8%
- Japan’s Topix rose 0.8%
- Australia’s S&P/ASX 200 rose 1.2%
- Hong Kong’s Hang Seng rose 1.4%
- The Shanghai Composite rose 0.3%
- Euro Stoxx 50 futures rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.3% to $1.0599
- The Japanese yen rose 0.4% to 150.36 per dollar
- The offshore yuan rose 0.1% to 7.3277 per dollar
Cryptocurrencies
- Bitcoin rose 0.2% to $35,531.16
- Ether rose 0.2% to $1,858.74
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.71%
- Japan’s 10-year yield declined 3.5 basis points to 0.920%
- Australia’s 10-year yield declined 15 basis points to 4.79%
Commodities
- West Texas Intermediate crude rose 1.3% to $81.45 a barrel
- Spot gold rose 0.3% to $1,987.92 an ounce
This story was produced with the assistance of Bloomberg Automation.
