SYDNEY, Jan 9 (Reuters) – Asian stocks advanced on
Tuesday after a tech-led rally on Wall Street as investors look
to the next set of U.S inflation numbers due this week, which
could provide further clarity on when the Federal Reserve might
start cutting interest rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan
edged up 0.2%, after U.S. stocks ended the
previous session with gains.
Trading in Europe was also set for a positive turn, with
the pan-region Euro Stoxx 50 futures up 0.29%, German
DAX futures 0.27% higher and FTSE futures up
0.34%.
U.S. stock futures, the S&P 500 e-minis, were down
slightly 0.1%.
Australian shares were up 0.95%, while Japan’s
Nikkei stock index was trading 1.14% higher.
In Australia, the S&P/ASX200 bounced higher after November
retail sales posted the biggest monthly gain in two years and
comfortably topped a Reuters poll estimate.
Hong Kong’s Hang Seng Index was up 0.26% while
China’s bluechip CSI300 Index gained 0.21% after
earlier trading in negative territory.
The positive sentiment across the region’s equities markets
comes ahead of December’s U.S Consumer Price Index (CPI) reading
due to be published on Thursday.
It is expected to show headline inflation rose 0.2% in the
month and by 3.2% on an annual basis.,
Overnight, the New York Fed’s latest Survey of Consumer
Expectations showed that U.S. consumers’ projection of inflation
over the short run fell to the lowest level in nearly three
years in December.
That reinforced bets for Fed cuts to begin soon, though some
analysts say the market pricing of monetary easing is overdone.
“The market is now looking for five U.S. rate cuts in 2024,
which we think is too aggressive. We’re looking to three, not
five,” said Marcella Chow, JPMorgan Asset Management’s global
market strategist in Hong Kong.
“Inflation has not returned to the target just yet and the
Fed should not be in too much of a rush to cut. CPI can be quite
sticky and stubborn, we expect them to start cutting rates from
June.”
China is due to publish December CPI figures on Friday which
analysts expect will show further deflation amid persistent
weakness in the economy.
China’s stock market was among the worst performers globally
in 2023, with the CSI300 index closing the year with
11% losses, against a 20% gain for global stocks
.
“Investors’ conviction and confidence is driving the Chinese
market now because on the fundamentals side in terms of earnings
and revenue performance it’s okay,” said Zhikai Chen, BNP
Paribas Asset Management’s head of Asian equities.
“But investors are just not willing to buy China or China
linked companies even though the valuations have gone down so
much.”
Chen said foreign investors were likely to remain out of the
Chinese equities markets until there were clearer signs of
stimulus to support domestic consumption and the country’s
troubled property sector.
The dollar on Tuesday dropped 0.43% against the yen to 143.6
. It is still some distance from last week’s high of
145.98.
The yen was earlier little changed after Tokyo core
inflation data slowed for the second month in December, new data
showed on Tuesday.
The result is expected to take some pressure that might
encourage the Bank of Japan to quickly exit ultra-loose monetary
policy.
The European single currency was up 0.1% on the day
at $1.0954, having lost 0.74% in a month, while the dollar index
, which tracks the greenback against a basket of
currencies of other major trading partners, was down at 102.19.
The Dow Jones Industrial Average rose 0.58% on
Monday, the S&P500 gained 1.41%, and the Nasdaq
climbed 2.2% following a strong surge in U.S tech stocks.
In Asian trading, the yield on benchmark 10-year Treasury
notes rose to 4.0114% compared with its U.S. close
of 4.002% on Monday.
The two-year yield, which rises with traders’
expectations of higher Fed fund rates, touched 4.3704% compared
with a U.S. close of 4.345%.
U.S. crude ticked up 0.1% to $70.84 a barrel. Brent
crude rose to $76.32 per barrel.
Gold was slightly higher. Spot gold was traded at
$2032.6823 per ounce.
(Reporting by Scott Murdoch in Sydney. Editing by Gerry Doyle &
Shri Navaratnam)
