(Bloomberg) — Stocks in Asia rose, following a big tech-led rally in US benchmarks, as investors look to key inflation data later Wednesday for clues on the Federal Reserve’s next steps.
Most Read from Bloomberg
The MSCI Asia Pacific Index – a gauge for benchmarks in the region – inched higher in early trading, extending gains after closing at a two-year high Tuesday. Equity benchmarks in Japan and Australia advanced at the open while futures for Hong Kong were little changed with that market closed for a holiday.
Tencent Holdings Ltd.’s American Depositary Receipts surged after revenue beat estimates in results reported late Tuesday, while Alibaba Group Holding Ltd.’s slid after profit plunged, highlighting the growing divergence between China’s twin internet powerhouses. Elsewhere, Hon Hai Precision Industry Co. reported a weaker-than-expected profit as demand for iPhones remained sluggish in China.
In the run-up to US consumer price index data, the S&P 500 shrugged off Jerome Powell’s signals that interest rates will be higher for longer and a mixed reading on producer inflation. US futures were little changed in early Asia trading.
“Investors are expecting inflation to fall in April,” said Anthony Saglimbene at Ameriprise. “Even if the decline is slight, markets are looking for further evidence that the downward trend in inflation remains intact and, importantly, is not in the process of reversing course higher.”
Investors will also be watching to see if Japan’s 10-year government bond yield hits the highest level in more than a decade. The yen was steady at around 156.50 per dollar ahead of a report on Thursday that is forecast to show Japan’s gross domestic product shrank at an annualized pace of 1.2% in the three months through March.
Meanwhile, China blasted the Biden administration’s move to increase US tariffs on a wide range of Chinese imports, vowing to take its own action, without giving specifics.
Elsewhere in the corporate world, Sony Group Corp.’s shares surged as investors rewarded its mid-term plan and shareholder return policy after the company announced its quarterly earnings.
Tops Estimates
A Bloomberg dollar index was flat as US 10-year Treasury yields were little changed Wednesday after falling five basis points to 4.44% in the previous session, as traders positioned for a sharp drop in yields in the aftermath of the PPI print.
US producer prices rose in April by more than projected, though key components that feed into the Fed’s preferred inflation gauge were more muted. Several categories in the PPI report that are used to calculate the personal consumption expenditures price index eased.
“A more granular look suggests the components that feed into PCE inflation sent mixed signals,” said Krishna Guha at Evercore. “This means that the burden largely remains on CPI.”
Underlying US CPI probably moderated in April for the first time in six months, offering some hope that price pressures will start to ease again. Compared with April 2023, the core CPI is projected to rise 3.6%. While the annual increase would be the smallest in three years, it would still be too high to warrant rate cuts.
A survey conducted by 22V Research showed 49% of investors expect the market reaction to the CPI report to be “risk-on” — while only 27% said “risk-off.”
In commodities, oil advanced after an industry report showed shrinking US stockpiles, and traders looked ahead to a report from the International Energy Agency that’ll shed light on market balances into the second half. Gold steadied after slipping from a three-week high.
Key events this week:
-
China rate decision, Wednesday
-
Eurozone industrial production, GDP, Wednesday
-
US CPI, retail sales, business inventories, empire manufacturing, Wednesday
-
Minneapolis Fed President Neel Kashkari speaks, Wednesday
-
Japan GDP, industrial production, Thursday
-
US housing starts, initial jobless claims, industrial production, Thursday
-
Philadelphia Fed President Patrick Harker speaks, Thursday
-
Cleveland Fed President Loretta Mester speaks, Thursday
-
Atlanta Fed President Raphael Bostic speaks, Thursday
-
China property prices, retail sales, industrial production, Friday
-
Eurozone CPI, Friday
-
US Conf. Board leading index, Friday
Some of the main moves in markets:
Stocks
-
S&P 500 futures were little changed as of 9:23 a.m. Tokyo time
-
Hang Seng futures were little changed
-
Japan’s Topix rose 0.8%
-
Australia’s S&P/ASX 200 rose 0.7%
-
Euro Stoxx 50 futures were little changed
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro was little changed at $1.0817
-
The Japanese yen was little changed at 156.52 per dollar
-
The offshore yuan was little changed at 7.2412 per dollar
Cryptocurrencies
-
Bitcoin rose 0.1% to $61,656.03
-
Ether fell 0.1% to $2,887.16
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.