(Bloomberg) — Asian stocks rose and the dollar fell on increased speculation that the U.S. Federal Reserve is nearing the end of its tightening cycle. Japan’s Nikkei stock average has hit a new high for the first time in 33 years.
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Regional stock indexes closed toward two-month highs as dovish comments from Federal Reserve officials last week strengthened the view that the central bank had stopped raising interest rates. The dollar weakened against all Group of Ten (G10) members, while an index of emerging market currencies rose to its highest since February.
Traders are now wondering if the Fed will begin its first March tightening campaign after Michael Barr, the Fed’s vice chair for oversight, said Friday that officials are likely at or near the end of their tightening campaign. The probability of a rate cut is approximately 30%. Still, San Francisco Fed President Mary Daly said policymakers were not convinced that inflation was on track to reach the 2% target.
U.S. Treasuries edged lower ahead of a 20-year bond auction that will help gauge whether investors are confident the 2023 stock market selloff is completely over. The U.S. Treasury market is poised to post its first monthly gain in November, ending a six-month losing streak. Government bonds in Australia and New Zealand also fell.
Win Hsin, global head of currency strategy at Brown Brothers Harriman & Co., said investors are anticipating continued downward pressure on U.S. Treasury yields and the dollar as the Fed’s dovish rhetoric persists. It is expected.
However, the market’s optimism seems a little overdone. “Do one month’s rather positive inflation statistics really justify a large change in interest rates?” he wrote in a note. “We believe otherwise, and yet we are here. We must respect this move, but it is one that we wholeheartedly oppose.”
Nikkei Stock Average hits 33-year high
The Nikkei Stock Average briefly surpassed June’s intraday high and reached its highest level since 1990, expanding its rise this year to more than 28%. The index was boosted by a prolonged weak yen, solid corporate profits, and corporate governance reforms promoted by the Tokyo Stock Exchange.
The offshore yuan rose after the People’s Bank of China raised the daily threshold for offshore yuan to its highest level since August. The country’s commercial lenders on Monday kept their benchmark lending rates unchanged, in line with the central bank’s decision this month to hold policy rates in favor of other measures to support stimulus spending.
“Like most developed and Asian countries, the renminbi is likely to have passed a tipping point against the dollar,” said Fiona Lim, senior foreign exchange analyst at Malayan Banking. “Despite the downward pressure from the downturn, the yuan is also significantly affected by cyclical pressures from policy differences with the Fed.”
U.S. stock futures edged lower in Asian markets after the S&P 500 index topped 4,500 on Friday, capping a three-week streak of gains.
In Argentina, liberal candidate Javier Millay defeated Economy Minister Sergio Massa to win Sunday’s presidential run-off. There was no immediate reaction in the market due to the holiday.
Oil rose as investors looked ahead to the OPEC+ meeting on supplies that will shape the market balance through 2024.
Investors are also keeping an eye on the impact of the OpenAI tensions. OpenAI interim CEO Mira Murati reportedly plans to rehire fired predecessor Sam Altman and former president Greg Brockman in roles that have yet to be finalized. It is said that
Chinese smartphone giant Xiaomi will report its financial results on Monday, and Nvidia will report its results on Tuesday.
Trading is likely to slow down further over the weekend ahead of the U.S. Thanksgiving holiday on Thursday.
This week’s main events:
European Central Bank Board members Pablo Hernández de Cos, François Villeroy de Galhau and Boris Vučić speak at separate events on Monday
Bank of England Governor Andrew Bailey speaks on Monday
US Conference Board Leading Index, Monday
Hong Kong CPI, Tuesday
European Central Bank President Christine Lagarde speaks on Tuesday
Canadian Consumer Price Index, Tuesday
US Federal Reserve Board (FRB) November Policy Meeting Minutes, Tuesday
Nvidia earnings Tuesday
Eurozone consumer confidence Wednesday
U.S. new unemployment insurance claims, University of Michigan consumer sentiment, durable goods, Wednesday
Eurozone PMI, Thursday
UK S&P Global/CIPS Manufacturing PMI, Thursday
European Central Bank releases report of October policy meeting on Thursday
US Thanksgiving holiday, Thursday
Japan CPI, Friday
German GDP, Friday
US Manufacturing PMI, Friday
Black Friday sale starts on Friday
The main movements in the market are:
S&P 500 futures were little changed as of 1:44 p.m. Tokyo time. The S&P 500 rose 0.1% on Friday.
Nasdaq 100 futures fell 0.3%.Nasdaq 100 almost unchanged
Japan’s TOPIX index fell by 0.7%
Hong Kong’s Hang Seng index rose 1.5%.
China’s Shanghai Composite Index rose 0.5%.
Australia’s S&P/ASX 200 index little changed
The Bloomberg Dollar Spot Index fell 0.3%.
The euro rose 0.1% to $1.0927.
The Japanese yen rose 0.5% to 148.93 yen to the dollar.
The offshore yuan rose 0.5% to 7.1779 yuan to the dollar.
The Australian dollar rose 0.6% to US$0.6553.
Bitcoin rose 0.6% to $37,213.45
Ether rises 1% to $2,004.1
The 10-year Treasury yield rose 1 basis point to 4.45%.
Japan’s 10-year bond yield remains unchanged at 0.750%
The Australian 10-year bond yield rose 4 basis points to 4.50%.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Matthew Burgess, Aya Wagatsuma, and Qizi Sun.
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