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Japan Stocks Advance, US Futures Dip Before CPI: Markets Wrap

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Japan Stocks Advance, US Futures Dip Before CPI: Markets Wrap


(Bloomberg) — Japanese stocks rose as trading resumed after a holiday while US equity futures edged lower ahead of inflation data due later Tuesday.

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Australian shares were steady in early trading while South Korean equities gained after the S&P 500 ended Monday little changed. Markets are closed in China, Hong Kong, Taiwan and Vietnam for Lunar New Year holidays.

The yen remained little changed Tuesday to trade around 149 per dollar, down from 140 at the start of the year. Recent softness reflects comments from Bank of Japan officials that the central bank will be in no hurry to exit supportive policy.

SoftBank Group Corp., one of Japan’s largest listed companies, opened around 10% higher after further gains for Arm Holdings Plc, in which it holds a stake. Arm shares jumped 29.2% in New York trading Monday and have almost tripled since listing in September.

Strong demand for chips, bolstered by expectations the coming boom in artificial intelligence will be a boon for manufacturers, helped Nvidia Corp. rise Monday — and briefly surpass the market value of Amazon.com Inc.

Treasuries were unchanged Tuesday in Asian trading with the yield on the 10-year around 4.18% while those on Australian and New Zealand bonds edged ahead.

An index of the dollar remained steady, reflecting the calmness in Treasury markets, ahead of January’s US consumer price index report due later Tuesday. The report is expected to show the first reading below 3% for year-over-year headline inflation since March 2021, supporting the disinflation narrative that has helped equities rally in recent months.

“It’s important not to lose sight of the big picture, which is that continued disinflation should allow the central bank to start easing this year,” said Mark Haefele at UBS Global Wealth Management.

Federal Reserve Bank of Richmond President Thomas Barkin said one simmering risk to inflation falling back toward the central bank’s target comes from US businesses. Many have boosted profit margins by raising prices in recent years — a practice that may be difficult to amend and one that would provide upward pressure for inflation.

Bond traders are now more in line with the Fed’s rate trajectory, but strategists at Citigroup Inc. say the market is overlooking the risk of rate increases following the easing cycle.

“The market should price in some risk of future hikes – look to 1998,” Jason Williams, global market strategist at Citigroup, wrote in a note. This cycle “could be more akin to the 1998 easing cycle, which was short-lived and led to more rate hikes. If inflation does not return to a consistent 2% the upside tails around future Fed hikes should increase from this very depressed level.”

Elsewhere in Asia, Japan January producer prices gained, slightly broadly in line with expectations. A report Tuesday showed Australia’s consumer confidence climbed to a 20-month high in February, while investors awaited New Zealand inflation expectations later today.

Bitcoin touched $50,000 for the first time since December 2021, aided by the record-breaking debut of US exchange-traded funds for the token.

Oil was steady after a six-day rally ahead of a market outlook from OPEC, and as traders also monitored developments in the Israel-Hamas war. Morgan Stanley raised its year-end oil price forecast on signs of tighter supply. Gold was little changed after falling slightly Monday to trade at around $2,020 per ounce Monday.

Key Events this Week:

  • Germany ZEW survey expectations, Tuesday

  • US CPI, Tuesday

  • Eurozone industrial production, GDP, Wednesday

  • BOE Governor Andrew Bailey testifies to House of Lords economic affairs panel, Wednesday

  • Chicago Fed President Austan Goolsbee speaks, Wednesday

  • Fed Vice Chair for Supervision Michael Barr speaks, Wednesday

  • Japan GDP, industrial production, Thursday

  • US Empire manufacturing, initial jobless claims, industrial production, retail sales, business inventories, Thursday

  • ECB President Christine Lagarde speaks, Thursday

  • Atlanta Fed President Raphael Bostic speaks, Thursday

  • Fed Governor Christopher Waller speaks, Thursday

  • ECB chief economist Philip Lane speaks, Thursday

  • US housing starts, PPI, University of Michigan consumer sentiment, Friday

  • San Francisco Fed President Mary Daly speaks, Friday

  • Fed Vice Chair for Supervision Michael Barr speaks, Friday

  • ECB executive board member Isabel Schnabel speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.2% as of 9:10 a.m. Tokyo time

  • Japan’s Topix rose 1%

  • Australia’s S&P/ASX 200 was little changed

  • Euro Stoxx 50 futures rose 0.7%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0771

  • The Japanese yen was little changed at 149.41 per dollar

  • The offshore yuan was little changed at 7.2168 per dollar

  • The Australian dollar was little changed at $0.6528

Cryptocurrencies

  • Bitcoin rose 0.3% to $49,971.01

  • Ether rose 1.7% to $2,676.91

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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©2024 Bloomberg L.P.



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