Asian Stocks Advance, Oil Jumps Amid Airstrikes: Markets Wrap
(Bloomberg) — Stocks in Asia rose, supported by a continuing rally in Japanese shares. Oil climbed on Mideast tensions.
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An Asian equity gauge gained as much as 0.6% as the Nikkei 225 advanced more than 1%, on track for the biggest weekly increase since April 2020. Shares in China, Hong Kong and Australia were little changed, while South Korea’s fell. US equity futures slipped after Wall Street benchmarks ended Thursday little changed, as solid inflation data failed to tame bets on Federal Reserve interest-rate cuts.
US consumer price index data showed headline prices increased more than expected in December, while core inflation fell — although less than consensus estimates. Swaps pricing for a cut by March increased slightly on the day, back toward levels seen at the end of 2023.
China’s consumer prices fell for a third straight month in December, a sign of weak domestic demand. That may justify the need for China’s central bank to cut a key policy rate and pump more cash into the financial system on Monday.
West Texas Intermediate rose more than 2% to above $73 after the US and its allies launched joint military strikes against Houthi rebels in Yemen following their attacks on ships in the Red Sea. The news of airstrikes also pushed gold and stocks of Asian shipping companies higher.
“If oil were to substantially increase that would jeopardize kind of this soft-landing scenario that is quite likely for the year,” Andrew Slimmon, head of applied equity advisors at Morgan Stanley Investment Management, said on Bloomberg Television.
Commodity-linked currencies benefited from the rise in crude oil, with the Australian dollar and Norwegian krone seeing modest gains. But traditional havens of the yen and Treasuries were little changed and Bloomberg’s gauge of the dollar dipped, suggesting global traders were mostly unfazed by the escalation.
In Asia, Japan’s November current account balance came in below forecasts. Also, the country’s benchmark two-year government bond yield dropped to zero for the first time since August as speculation further faded that the Japanese central bank will tweak its monetary policy at a meeting this month.
Treasuries were slightly lower Friday after the 10-year yield fell six basis points on Thursday and the policy-sensitive two-year yield dropped by around 11 basis points.
Federal Reserve Bank of Cleveland President Loretta Mester pushed back against the prospect of a March rate cut and said the inflation figures showed policymakers had further work to do.
“What should be most important for investors is that the Fed is done raising rates,” said Chris Zaccarelli at Independent Advisor Alliance. “Whether they cut in March or cut in June and whether they cut four times, three times, or only two times, shouldn’t matter too much.”
Elsewhere, more than $4 billion of shares traded between the 11 US spot Bitcoin exchange-traded funds on Thursday following Securities and Exchange Commission approval for the funds. Bitcoin was steady near $46,000.
Key events this week:
UK industrial production, Friday
US PPI, Friday
Some of the biggest US banks report fourth-quarter results, Friday
Minneapolis Fed President Neel Kashkari speaks, Friday
ECB chief economist Philip Lane speaks, Friday
Some of the main moves in markets:
S&P 500 futures were little changed as of 12:30 p.m. Tokyo time
Japan’s Nikkei 225 gained 1%
Japan’s Topix rose 0.2%
Australia’s S&P/ASX 200 was little changed
Hong Kong’s Hang Seng fell 0.1%
The Shanghai Composite was little changed
Euro Stoxx 50 futures rose 0.7%
The Bloomberg Dollar Spot Index fell 0.1%
The euro was little changed at $1.0982
The Japanese yen rose 0.2% to 144.98 per dollar
The offshore yuan was little changed at 7.1699 per dollar
Bitcoin fell 0.3% to $46,007.65
Ether fell 0.4% to $2,594.15
West Texas Intermediate crude rose 2.2% to $73.63 a barrel
Spot gold rose 0.3% to $2,034.72 an ounce
This story was produced with the assistance of Bloomberg Automation.
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