Asian Stocks Rise While US Stocks Rise, Dollar Falls: Markets Wrap

(Bloomberg) – Stocks in Asia rose on Wednesday after a late rally in U.S. stocks in a volatile session after Federal Reserve Chair Jerome Powell dismissed an opportunity to dampen investor optimism.

Most read by Bloomberg

Stocks in Australia and Japan rose while Hong Kong futures fell. US futures fell to moderate a Tuesday rally. The S&P 500 gained more than 1%, reversing a 0.6% decline. The tech-heavy Nasdaq 100 outperformed major benchmarks, rising more than 2%.

Australian bonds fell in early trade after falls in Treasuries on Tuesday that pushed the benchmark 10-year yield up three basis points to 3.67%. An index of the dollar weakened to extend a decline in the previous session.

The yen stabilized after rising more than 1% on Tuesday, while the Aussie was trending higher after also gaining more than 1% following the Reserve Bank of Australia’s decision to hike interest rates on Tuesday.

Powell’s sober comments echoed those made after last week’s FOMC meeting and reassured traders who expected the Fed chair to roll back easing financial conditions and Friday’s record jobs report. Powell stressed that disinflation had begun and that more hikes were likely needed if the job market remained strong.

In separate comments, Minneapolis Fed President Neel Kashkari said that given the strength of the US jobs market, the Fed would likely need to hike rates to 5.4% at the top of its target range. The Fed hiked rates by 25 basis points last week to a range of 4.5% to 4.75%.

“The important takeaway is that Powell had an opportunity to signal a shift to a more aggressive stance and he didn’t take it,” wrote Bill Adams, chief economist at Comerica Bank in Dallas. “In the near term, the Fed will likely continue to make one (or maybe two) more rate hike(s) before shedding.”

Read: Powell says more rate hikes are needed and bonds beware

Investors will be paying close attention to shares of Adani companies after their flagship stock has jumped the most since Hindenburg Research’s damning report two weeks ago. Hedge fund and distressed debt investors have started buying Adani corporate bonds. Rating agency Moody’s said in a report that Indian banks’ exposure to the Adani group is not large enough to affect its credit quality.

Elsewhere in markets, oil prices continued to rise after rising 4.1% on Tuesday, the biggest one-day move since November, helped by a rebound in demand from China.

Traders will also be watching Joe Biden’s speech before a joint session of Congress Tuesday night in Washington amid renewed tensions with China and a looming showdown with House Republicans over raising the federal debt ceiling.

Read: NYSE plans to pay majority of glitch-related claims in full

Key Events:

• US Wholesale Inventories, Wednesday

• New York Fed President John Williams will be interviewed at a live Wall Street Journal event on Wednesday

• US initial jobless claims, Thursday

• ECB President Christine Lagarde will attend the EU summit on Thursday

• Bank of England Governor Andrew Bailey appears before the Finance Committee on Thursday

• University of Michigan consumer sentiment, Friday

• The Fed’s Christopher Waller and Patrick Harker speak on Friday

Some of the key market movements as of 9:12 a.m. Tokyo time:

Shares

• S&P 500 futures fell 0.2%. The S&P 500 rose 1.3%

• Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 2.1%

• Hang Seng futures fell 0.9%

• Japan’s Topix rose 0.1%

• Australia’s S&P/ASX 200 rose 0.4%

currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0733

• The Japanese yen was little changed at 130.95 per dollar

• The offshore yuan rose 0.1% to 6.7761 per dollar

cryptocurrencies

• Bitcoin rose 0.2% to $23,239.83

• Ether was little changed at $1,669.07

Bind

raw materials

This story was created with the support of Bloomberg Automation.

Most Read by Bloomberg Businessweek

©2023 Bloomberg LP

Source