(Source: Bloomberg) Friday saw mixed results for equity markets in Asia as traders processed contradictory signals in US inflation data. Meanwhile, oil prices increased following the UK’s approval of military action in Yemen.
In early Asian trade, West Texas Intermediate increased by more than 2% to surpass $73. Following the Houthi rebels’ attacks on ships in the Red Sea, UK Prime Minister Rishi Sunak ordered combined military action with the US against the insurgents in Yemen.
While Hong Kong equity futures and Australian shares declined, Japanese equities continued their current uptrend. US futures saw minimal movement as the S&P 500 finished Thursday unchanged and the tech-heavy Nasdaq 100 closed 0.2% higher, marking the start of a run that hasn’t occurred in almost a month.
The subdued movements came as consumer price index data revealed core inflation decreased in December, albeit less than consensus forecasts, while headline prices rose more than anticipated.
The forecast for rate cuts by the Federal Reserve remained unaffected by the data. The price of swaps for a March reduction rose little during the day, returning to levels observed at the end of 2023.
President of the Federal Reserve Bank of Cleveland Loretta Mester brushed off the idea of a March decrease, arguing that the inflation data indicated policymakers still had work to do.
According to Chris Zaccarelli of Independent Advisor Alliance, “the Fed’s decision to stop raising rates should be the most important thing for investors.” “It shouldn’t matter too much whether they cut four times, three times, or only twice, or whether they cut in March or June.”
Following a Thursday surge that saw the 10-year yield drop six basis points and the policy-sensitive two-year yield drop about 11 basis points, Treasury bonds were little changed early on Friday.
The New Zealand dollar and the Norwegian kronere were the top gainers among the G-10 currencies early on Friday as falling interest rates made the dollar less valuable relative to other major currencies. The yields in Australia and New Zealand decreased, matching the decreases in Treasury rates on Thursday.
China, Bitcoin
In other news, after the Securities and Exchange Commission approved the funds, more than $3 billion worth of shares were exchanged on Thursday amongst the 11 US spot Bitcoin exchange-traded funds. Bitcoin’s price increased somewhat to cross $46,000.
Data on producer prices and inflation in China for December, India’s CPI statistics, and Japan’s current account balance for November are among the Asian data sets that will be made public.
According to a local media source, many Chinese towns are purchasing homes and turning them into rental units through inexpensive loans from the central bank. This would be a novel approach to resolving the country’s real estate predicament.
Important happenings this week:
- China trade, PPI, and CPI on Friday
- Industrial production in the UK, Friday
- US PPI on Friday
- On Friday, a few of the largest US banks release their fourth-quarter earnings.
- Friday speech by Minneapolis Fed President Neel Kashkari
- Philip Lane, the head economist at the ECB, talks on Friday.
Among the main market movements are:
Stocks - A little altered as of 9:11 a.m. Tokyo time, S&P 500 futures
- The Nasdaq 100 futures showed minimal movement.
- The Hang Seng futures dropped 0.7%.
- Topix in Japan increased 0.6%.
- Currencies: Australia’s S&P/ASX 200 declined 0.2%
- The 0.1% decline in the Bloomberg Dollar Spot Index
- The euro was little moved, trading at $1.0982.
- Little changed, the value of the Japanese yen was 145.23 per dollar.
- Little changed, with the offshore yuan trading at 7.1704 per US dollar.
- Digital Money
- Up 0.3% to $46,322.94 was Bitcoin.
- Ether cost $2,619.94, up 0.6%.
- Bonds
- The yield on 10-year Treasury bonds remained relatively stable at 3.96%.
- Japan’s 10-year yield, which stands at 0.580%, barely moved.
- Australia’s 10-year yield dropped to 4.05% Commodities, down five basis points.
- At $73.49 a barrel, West Texas Intermediate crude saw a 2% increase.
- Spot gold up 0.2% to an ounce for $2,032.70-
- Bloomberg Automation provided assistance in the production of this report.
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