Stocks extend gains in Asia amid inflation focus: markets wrap

Shares opened higher in Hong Kong, Japan and Australia after the S&P 500 moved back above its key 3,900 mark. US futures contracts inched higher in Asian trading. 

South Korea’s Kospi gave up much of its earlier gain as semiconductor makers narrowed an advance and financials widened losses. Plans by Apple to start using its own custom displays in mobile devices also damped sentiment. 

Treasury yields trimmed the advance they made on Tuesday, with the rate on 10-year debt easing to around 3.6% as investors remained focused on the price outlook for the US.

Federal Reserve chair Jerome Powell refrained from commenting on the outlook for monetary policy at an event on Tuesday as traders look to Thursday’s inflation data for any signs of cooling. Any cooling of CPI figures could help build the case to slow its pace of rate hikes, even as some officials say it’s too early to declare victory over inflation.

Australian government bond yields and the nation’s currency gave up gains made in the wake of data showing inflation accelerated in November. 

A gauge of dollar strength was little changed near a seven-month low. The yen steadied in the middle of its range since late December. The offshore yuan weakened slightly while remaining close to the strongest level versus the greenback since August.

JPMorgan Chase & Co’s sales and trading desk expects Thursday’s inflation figures to come in cooler than forecast, helping stocks extend a bear-market rally. The bank’s chief Jamie Dimon told Fox Business that rate hikes might need to go beyond what’s currently expected.

While Powell didn’t directly comment on the Fed’s next steps at a forum in Stockholm, he did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy.” Fed governor Michelle Bowman said the central bank has more work to do to curb inflation, noting that further tightening is needed.

Meanwhile in Asian markets, much focus is on China and its reopening from Covid curbs. The MSCI Asia Pacific Index rose, adding to Monday’s move, when it entered a bull market amid hopes for economic growth and weakness in the dollar.

Yet China’s reopening has also triggered a surge of infections and tighter requirements for its citizens to enter many countries. Beijing has begun to hit back against this, suspending some visas for South Korea and Japan. BM/DM