(Bloomberg) — Asian stocks were mixed Thursday as Chinese mainland equities rose in the final trading day before the Lunar New Year holidays. The S&P 500, meanwhile, closed at a fresh high.
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Chinese benchmarks climbed after the nation replaced the head of its securities regulator Wednesday, a surprise move that may foreshadow more forceful steps to support the stock market. However, weighing on the still fragile sentiment was China’s consumer prices that fell last month at the fastest pace since the global financial crisis as the country struggles to shake off persistent deflation pressures.
China’s stock valuations are cheap but to “lay the foundations for a multi-year uptrend, we really need to see inflation data improving quite significantly, moving back into positive territory,” Steve Brice, chief investment officer for wealth management at Standard Chartered, said on Bloomberg Television. “That’s going to need most likely significant policy stimulus.”
Meanwhile, a gauge of the region’s equities climbed for a third day. Benchmarks in Australia and South Korea rose while those in Japan advanced after the yen weakened following comments from Shinichi Uchida, a Bank of Japan’s deputy governor. He said it was hard to see the bank raising its policy rate continuously and rapidly even after the negative interest rate is ended.
US futures were little changed after the S&P 500 climbed 0.8% on Wednesday to come within striking distance of 5,000 index points as traders bet that a solid economy will continue fueling corporate profits.
Treasuries slighty rose in Asian trading as the 10-year retraced a minor decline from the prior session. Wednesday was marked by a record $42 billion auction that sold at a lower yield than expected, in a sign of strong demand and easing concerns that the market may struggle to digest heavy supply.
“The market continues to climb the wall of worry, including shifting Fed expectations, geopolitical tension, and overbought market conditions,” said Mark Hackett at Nationwide Funds Group. “We are entering a sluggish seasonal period, but the market has strong momentum.”
In Asia, Japan’s December current account balance was lower than expected. India’s central bank left its benchmark interest rate unchanged for a sixth straight meeting Thursday and retained its hawkish policy stance, signaling rates will stay higher for longer.
Markets in Taiwan, Indonesia, Vietnam and Pakistan are closed. Earnings to be released in the region include Honda Motor Co. and SoftBank Group Corp., which is expected to have one of its best quarters in years.
Alibaba Group Holding Ltd. shares fell around 6% in Hong Kong despite the company unveiling $25 billion in stock repurchases. Arm Holdings Plc, in which SoftBank owns a stake, rallied by as much as 38% in after-hours trading in New York after upbeat earnings, while Softbank rose in Asia. US chip stocks within the S&P 500 rose 2.1%, more than the broader market, helped along by a 2.8% gain for Nvidia Corp.
Renewed fears about US regional banks appeared to ease, helping support the tentative risk-on tone in New York trading. New York Community Bancorp shares ended higher after retracing an intraday 14% decline.
More Fed officials suggested Wednesday they don’t see an urgent case for lowering interest rates, adding to a roster of policymakers including Chair Jerome Powell who have warned in recent days that a cut isn’t likely until May at the earliest.
In commodity markets, gold retraced a small Wednesday decline to trade at around $2,033 per ounce. Oil prices rose.
Key events this week:
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US wholesale inventories, initial jobless claims, Thursday
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Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing on the Financial Stability Oversight Council annual report, Thursday
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Pharma CEOs speak at a Senate panel on prescription drug prices, Thursday
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ECB Chief Economist Philip Lane speaks, Thursday
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ECB publishes economic bulletin, Thursday
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US CPI revisions, Friday
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Germany CPI, Friday
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President Joe Biden hosts German Chancellor Olaf Scholz at the White House, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 1:31 p.m. Tokyo time. The S&P 500 rose 0.8%
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Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1%
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Japan’s Topix index rose 0.8%
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Hong Kong’s Hang Seng Index fell 0.9%
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China’s Shanghai Composite Index rose 1.2%
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Australia’s S&P/ASX 200 Index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.1% to $1.0785
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The Japanese yen fell 0.2% to 148.44 per dollar
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The offshore yuan was little changed at 7.2092 per dollar
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The Australian dollar rose 0.1% to $0.6527
Cryptocurrencies
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Bitcoin rose 0.8% to $44,561.01
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Ether was little changed at $2,430.53
Bonds
Commodities
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West Texas Intermediate crude rose 0.4% to $74.14 a barrel
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Spot gold fell 0.1% to $2,033.19 an ounce
This story was produced with the assistance of Bloomberg Automation.
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