Asian stocks were muted after US equities struggled and bonds slumped following data reinforcing the case for the Federal Reserve to keep interest rates higher for longer. Oil climbed as the Israel-Hamas conflict intensified.
(Bloomberg) — Asian stocks were muted after US equities struggled and bonds slumped following data reinforcing the case for the Federal Reserve to keep interest rates higher for longer. Oil climbed as the Israel-Hamas conflict intensified.
Benchmark indexes were little changed in Australia and Japan, while South Korean shares edged lower. US futures fell after the S&P 500 erased gains Tuesday, with Nvidia Corp. leading a slump in technology stocks as the US restricts the sale of chips the company designed for the Chinese market.
Treasuries steadied in early Asian trading after two-year yields hit the highest since 2006 in the previous session. Swap contracts tied to Fed rate decisions showed traders are pricing in more than 60% odds that policymakers will raise interest rates by a quarter percentage point in January. Australian 10-year yields jumped 10 basis points Wednesday.
“Good news about the economy is once again bad news, since it will keep policymakers on the fence on delivering more tightening,” said Edward Moya, senior market analyst for the Americas at Oanda. “It seems the US economy isn’t ready to head into a recession just yet.”
Japan’s benchmark 10-year yield rose to the highest level since 2013 amid speculation that the central bank may adjust its monetary policy further. The Bank of Japan is likely to discuss raising its inflation projection at its policy meeting later this month, extending the period in which it sees prices hitting or exceeding its 2% goal, according to people familiar with the matter.
US retail sales exceeded all forecasts and industrial production strengthened last month, fresh evidence of a resilient American consumer whose spending is helping stabilize manufacturing. The reports prompted a slew of economists, from Goldman Sachs to JPMorgan Chase & Co. and Morgan Stanley, to boost their tracking estimates for third-quarter gross domestic product.
Traders also kept a close eye on the latest geopolitical events. President Joe Biden’s dramatic war-time visit to Israel and Jordan began to unravel even before he left the ground, after an explosion at a Gaza hospital left hundreds dead and Arab leaders pulled out of a meeting planned for the trip. Oil extended gains to advance over 1.9% in early Asia trading.
Israel blamed a failed missile from militant group Palestinian Islamic Jihad for the blast, potentially the deadliest since the killing of 1,300 Israelis in the Oct. 7 attack by Hamas, which is designated a terrorist organization by the US and European Union. The Pentagon said it didn’t have information on who was responsible and the US called for an investigation.
Meanwhile, data out of China is expected to confirm gross domestic product expanded 4.5% in the July-to-September period from a year earlier — below the official full-year target of about 5%. That may put further pressure on the government to provide more stimulus.
Key events this week:
- China GDP, retail sales, industrial production, Wednesday
- UK CPI, Wednesday
- Eurozone CPI, Wednesday
- Morgan Stanley, Netflix, Tesla earnings, Wednesday
- Federal Reserve issues Beige Book economic survey, Wednesday
- Philadelphia Fed President Patrick Harker and New York Fed President John Williams speak at separate events, Wednesday
- Australia unemployment, Thursday
- Japan trade, Thursday
- China property prices, Thursday
- US initial jobless claims, existing home sales, leading index, Thursday
- Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
- S&P 500 futures fell 0.3% as of 9:28 a.m. Tokyo time. The S&P 500 was little changed.
- Nasdaq 100 futures fell 0.3%. The Nasdaq 100 fell 0.3%
- Hang Seng futures were little changed
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 rose 0.1%
- Euro Stoxx 50 futures were little changed
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0565
- The Japanese yen was little changed at 149.73 per dollar
- The offshore yuan was little changed at 7.3260 per dollar
- The Australian dollar was little changed at $0.6359
- Bitcoin fell 0.1% to $28,420.05
- Ether rose 0.4% to $1,566.17
- The yield on 10-year Treasuries was little changed at 4.83%
- Japan’s 10-year yield advanced three basis points to 0.810%
- Australia’s 10-year yield advanced nine basis points to 4.64%
- West Texas Intermediate crude rose 1.9% to $88.32 a barrel
- Spot gold rose 0.2% to $1,926.48 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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