(Bloomberg) — Asian stock markets opened higher Thursday as solid earnings overcame concerns about persistent inflation and Wall Street resumed its rally.
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Stock prices in Australia and Japan rose, but those in South Korea fluctuated. Taiwan stocks hit their highest intraday high for the first trading day since Feb. 5, helped by a 9.8% rise in Taiwan Semiconductor Manufacturing Co. Hong Kong stocks erased early losses and rose for the second straight day.
Japan's blue-chip stock index is at a three-year high compared to a broader range of companies, as technology companies and other major exporters rise on the back of higher profits and a weaker yen. The so-called NT ratio, which compares the Nikkei Stock Average and TOPIX, reached its highest level since 2021.
“Asian markets are taking cues from the US market, which continues to price in a soft landing outcome for the economy and earnings growth in 2024 very aggressively,” said Homing Li, senior macro strategist at Lombard Odier. Ta.
Japanese officials said the country was in the final stages of overcoming deflation ahead of Thursday's release of economic growth figures, indicating the country was entering an unexpected recession. The yen was little changed at around 150 yen to the dollar, after hitting a three-month low this week.
U.S. futures were little changed in Asian markets after the S&P 500 rose 1% on Wednesday to regain the 5,000 mark. As investors continue to parse the data, gains on Tuesday turned into a sharp loss as U.S. core inflation rose more than expected in January, leaving the path for a Federal Reserve rate cut unclear. I got the part back.
“We do not intend to change our call for risk-on factors and the economic cycle to outperform through 2024,” 22V Research strategists led by Dennis Dubuscher said in a note Wednesday. “Over time, it will become clear that January was more of a one-off rather than a new CPI trend.”
U.S. Treasuries were little changed after Wednesday's rally sent the 10-year Treasury yield down 6 basis points. Yields in Australia and New Zealand fell on Thursday. The dollar index fell slightly.
Thanks to TSMC's breakthrough, it reached an all-time high. Morgan Stanley raised its price target on the company by 9%, expecting the semiconductor giant to generate more “meaningful” revenue from artificial intelligence chips this year.
“The move to a larger language model will drive demand for high-end chips, which will benefit TSMC's advanced foundry business,” analysts including Charlie Chan wrote in a note.
Wednesday's rally in U.S. stocks was supported by big tech companies. The NYSE Fang+ index, which includes Nvidia Corp, Microsoft Corp and Apple Inc, rose 2%, twice as much as the broader market. A favorable financial report also provided a tailwind. Uber soared 15% after announcing a $7 billion stock buyback, while Robinhood Markets rose 14% after sales beat expectations.
Employment in Australia rose slightly at the start of the year, but the unemployment rate rose to a two-year high, underscoring the cooling of the country's labor market and prompting bets on an early interest rate cut. The Australian dollar's gains disappeared after the data, and there was little change against the US dollar.
Mainland Chinese markets remain closed on Thursday for the Lunar New Year holiday. The Golden Dragon index of U.S.-listed Chinese companies rose 3.5% in New York trading, a sign of upward pressure on these stocks.
Traders have further reduced expectations for a Fed rate cut and have all but given up hope for a rate cut in March. There is a one in three chance that the next meeting will be held in early May, down from near-perfect certainty two weeks ago.
“The 'hot' inflation numbers do not change the baseline scenario for a soft landing,” said Solita Marcelli of UBS Global Wealth Management. “However, we continue to monitor incoming data and could delay the start of rate cuts if the economy remains strong.”
Chicago Fed President Austan Goolsby said Wednesday that the central bank's path back to its 2% goal remains consistent even with a slight uptick in inflation data in the next few months. Meanwhile, Federal Reserve Vice Chairman Michael Barr said U.S. policymakers needed to see more data showing inflation was returning to target levels before starting to cut rates.
In Asia, India's January trade statistics and the Philippines' monetary policy decisions are scheduled to be announced. Meanwhile, in Indonesia, Defense Minister Prabowo Subianto declared his victory in Wednesday's presidential vote.
Statistics to be released Thursday in the United States include US Empire Manufacturing, new jobless claims, industrial production, retail sales and business inventories.
In addition, BHP Group announced that it expects to record a $2.5 billion impairment charge in its half-year results related to its nickel assets to be published next week.
Oil fell on Wednesday after the US reported crude oil inventories had increased to levels last seen in November. Gold was little changed at $1,992 an ounce. Bitcoin has topped $52,000, trading at levels not seen since December 2021.
This week's main events:
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US manufacturing industry, number of new unemployment insurance claims, industrial production, retail sales, business inventories, Thursday
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ECB President Christine Lagarde speaks on Thursday
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Atlanta Fed President Rafael Bostic speaks Thursday
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Fed Director Christopher Waller speaks Thursday
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ECB Chief Economist Philip Lane speaks on Thursday
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U.S. Housing Starts, PPI, University of Michigan Consumer Sentiment, Friday
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San Francisco Fed President Mary Daley speaks on Friday
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Fed Vice Chairman for Supervision Michael Barr speaks on Friday
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ECB board member Isabel Schnabel speaks on Friday
The main movements in the market are:
stock
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S&P 500 futures were little changed as of 11:49 a.m. Tokyo time.
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Nikkei 225 futures (OSE) rose 0.5%
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Japan's TOPIX fell 0.1%
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Australia's S&P/ASX 200 rose 0.6%
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Hong Kong's Hang Seng rose 0.1%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0730.
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The Japanese yen rose 0.3% to 150.19 yen to the dollar.
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The offshore yuan was almost unchanged at 7.2254 yuan to the dollar.
cryptocurrency
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Bitcoin rose 0.7% to $52,144.01
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Ether rose 0.5% to $2,793.94
bond
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The 10-year Treasury yield fell 3 basis points to 4.23%.
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Japan's 10-year bond yield fell 3.5 basis points to 0.715%.
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Australian 10-year bond yields fell 12 basis points to 4.15%.
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Winnie Hsu and Richard Henderson.
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