(Bloomberg) — Stocks in Asia were set to rise Thursday after US equities gained, helped along by comments from Federal Reserve Chair Jerome Powell that interest rates will likely fall this year.
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Equity futures for benchmarks in Japan, Australia and Hong Kong all drifted higher, taking cues from the S&P 500 Index, which rose 0.5% Wednesday to reclaim its 5,100 mark, and the tech-heavy Nasdaq 100, which advanced 0.7%.
Powell said in testimony to a House of Representatives panel that while he sees no urgency in cutting rates given the strength of the US economy, it would likely be appropriate to do so “at some point this year.”
“While Powell didn’t commit to rate reductions in the near future, his positivity concerning the trajectory of inflation amidst confidence that the central bank’s current rate is likely at its peak is enough for market participants,” said Jose Torres at Interactive Brokers.
The Fed Chair also said US regulators will probably tweak rules requiring lenders to hold more capital — a win for Wall Street banks. Separately, commercial real estate lender New York Community Bancorp received a $1 billion equity investment, stemming a sharp decline in its stock price.
An index of the dollar fell Wednesday, weighed down by a decline in Treasury yields. The 10-year benchmark fell five basis points to 4.1%. Australian and New Zealand yields also slipped early Thursday.
US job openings data remained elevated, while private payrolls registered another strong month of increases in February, albeit slightly below estimates. The Fed’s Beige Book survey showed the US economy has expanded at a modest pace since earlier in the year, while consumers showed more sensitivity to rising prices.
In Asia, data set for release includes Australian trade data, Taiwan inflation and China trade and foreign reverses reports while Malaysia will hand down a monetary policy decision. Bank of Japan official Junko Nakagawa is also set to speak.
In efforts to address financial risks from its debt-laden local government sector, Chinese regulators terminated applications for new LGFV bonds. Policymakers face an uphill battle in tackling the LGFV sector’s $9 trillion debt pile, at a time when the world’s No. 2 economy is plagued by an ailing housing market, a key revenue source for regional authorities.
Chinese tech will also be in focus after JD.com Inc. initiated a $3 billion share buyback program following an increase in revenue that exceeded consensus expectations. The Golden Dragon index of US-listed Chinese companies rose 2% in New York trading Wednesday, snapping two days of declines, in a sign of support for the market.
Elsewhere, Bitcoin resumed its rally, hovering near $67,000 while gold extended its recent record-setting run, with gains for the cryptocurrency and the precious metal sending mixed messages to market participants.
Oil prices rose Wednesday to push West Texas Intermediate 1.3% higher. Further tension in the Middle East that included the first confirmed deaths of commercial crew after Houthi militants began attacks in the region.
Key Events This Week:
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China trade, forex reserves, Thursday
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European Central Bank’s rate decision, Thursday
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US initial jobless claims, trade, Thursday
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President Joe Biden delivers the State of the Union address, Thursday
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Fed Chair Jerome Powell testifies before the Senate Banking Committee, Thursday
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Cleveland Fed President Loretta Mester speaks, Thursday
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Eurozone GDP, Friday
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US nonfarm payrolls, unemployment, Friday
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New York Fed President John Williams speaks, Friday
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ECB Governing Council member Robert Holzmann speaks, Friday
Some of the main moves in markets:
Stocks
Currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro was unchanged at $1.0899
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The Japanese yen was little changed at 149.32 per dollar
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The offshore yuan was little changed at 7.2092 per dollar
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The Australian dollar was little changed at $0.6562
Cryptocurrencies
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Bitcoin fell 0.5% to $66,146.88
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Ether fell 0.9% to $3,813.03
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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