Asian equity markets experienced a notable uptick on Thursday, buoyed by new record highs in the US stock market, as investors eagerly anticipated forthcoming inflation figures that could steer Federal Reserve policies in the near future.
In the latest trading session, shares in Japan, South Korea, and Australia each posted gains, and futures for Hong Kong stocks also rose. Meanwhile, US-listed Chinese stocks faced a decline, following a significant drop in mainland China’s benchmark index—the most pronounced in over four years.
Bond yields remained steady during early Asian trading after experiencing a slight increase in New York the previous day. The Bloomberg Dollar Spot Index held its ground on Thursday after a recent 0.4% rise, marking an eighth consecutive day of increases. The Japanese yen remained stable against the dollar, following a dip to its lowest level since mid-August, hovering around 149 per dollar.
Investors continue to scrutinize indications of support for China’s economy and financial markets, which have struggled with volatility recently. A gauge tracking volatility in Hong Kong stocks showed a slight decrease, yet it remained significantly above historical averages. A key concern for investors is the potential for more fiscal stimulus; Chinese authorities announced a press conference on the topic scheduled for the weekend.
On the corporate side, Taiwan Semiconductor Manufacturing Co. reported a surprising 39% jump in quarterly revenue, although markets in Taiwan were closed for trading on Thursday.
The S&P 500 index surged 0.7%, achieving its 44th record high this year, propelled by gains in the technology sector. Notable performers included Apple, which rose by 1.7%, while Nvidia halted its five-day rally. Tesla experienced a slight dip ahead of the anticipated launch of its Robotaxi, and Alphabet saw a 1.5% drop tied to speculation about a potential breakup due to ongoing antitrust concerns.
Market analysts view the gains in tech shares as a rebound opportunity from previous weaknesses in the sector. “We maintain an optimistic outlook on the tech industry and the potential for artificial intelligence,” noted Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management. She emphasized that market volatility should ideally be leveraged to enhance long-term investments in AI.
Later today, the consumer price index (CPI) data is set to be released, with predictions suggesting a 0.1% increase for September—a reflection of further moderation in inflation rates. This data is crucial, as it may provide support for anticipated Fed easing measures in the coming months. However, recent market pricing indicates that expectations surrounding a possible rate reduction have significantly shifted, with another 50 basis point cut becoming unlikely after a robust jobs report last week.
Despite the anticipated drop in inflation, analysts point out that the Fed’s shifting focus towards labor market dynamics may lessen the impact of upcoming CPI reports. Matthew Weller from Forex.com and City Index remarked that while the economic rationale suggests reduced market reactions to inflation data, volatility could still arise from this month’s CPI, especially following last Friday’s positive jobs report.
In the commodities arena, oil prices remained stable as US crude stockpiles swelled, and traders closely monitored China’s fiscal strategies. Gold prices showed little fluctuation after experiencing a six-session downturn.
Key Highlights to Monitor:
– US CPI and initial jobless claims data—Thursday
– Fed officials John Williams and Thomas Barkin will speak—Thursday
– Earnings season kicks off with JPMorgan and Wells Fargo—Friday
– US Producer Price Index (PPI) and University of Michigan consumer sentiment will be announced—Friday
– Additional comments from Fed leaders, including Lorie Logan and Austan Goolsbee—Friday
Some significant market movements included:
– S&P 500 futures remained largely unchanged as of the latest Asian trading session.
– Hang Seng Futures registered a 2.1% increase.
– Japan’s Topix Index rose by 0.6%.
– The Australian S&P/ASX 200 index climbed 0.4%.
– Futures for Euro Stoxx 50 rose 0.7%.
Currency markets showed little volatility, with the Bloomberg Dollar Spot Index steady. Notable performances included a slight rise for the euro against the dollar and a nominal uptick for the Japanese yen. On the cryptocurrency front, Bitcoin saw a modest increase, edging up by 0.3% to $60,594.23, while Ether gained 0.6% to reach $2,368.59.
In bond markets, the yield on 10-year US Treasuries remained largely static at 4.07%. Additionally, Australia’s 10-year yield saw a minor rise of four basis points, reaching 4.23%.
This comprehensive look into the dynamics of the Asian markets, influenced by US performance, highlights the intricate relationship between economic indicators, central bank policies, and investor sentiment, underscoring an ever-evolving financial landscape.