Asian stocks rise after tech rally boosts S&P 500: markets wrap

An Asian equity gauge was headed for a fifth weekly advance and its highest close since April, supported by gains in Japan, South Korea and Australia. 

Hong Kong stocks erased early gains, and sentiment may be dragged down by a report that Japan and the Netherlands are poised to join the US in limiting China’s access to advanced semiconductor machinery. Mainland China remains closed for the Lunar New Year holiday.

The S&P 500 closed at the highest level in more than a month, reflecting a jump in tech stocks. The Nasdaq 100 rose 2% to the highest level since September, led by an 11% gain for Tesla as Elon Musk teased potential for the carmaker to produce 2 million vehicles this year.

Australian bonds fell further, with 10-year yields rising more than six basis points to 3.57%, following similar moves in US Treasuries. The Aussie held gains from Thursday, while the yen ticked higher after falling 0.5% the day before. 

The yen extended gains after Tokyo inflation exceeded estimates. Inflation rose to the highest level since 1981 after last month’s reading was revised down. Quickly rising prices will add pressure on the Bank of Japan to scale back its stimulus after the central bank redoubled its efforts to depress bond yields earlier this month.

“The latest Tokyo inflation report underscores rising price pressure and that could continue to drive speculation of another monetary policy adjustment by the Bank of Japan and further Japanese yen strength,” said Fiona Lim, senior currency analyst at Malayan Banking in Singapore.

Adani Enterprises, which fell in India on Wednesday, is set to publish a response to allegations of fraud from a short seller after the company said on a call with bondholders the claims were “bogus”, according to investors who participated.

The advance for US shares followed mixed economic data. US gross domestic product rose at a faster-than-forecast pace in the December quarter, but there were signs of slowing underlying demand as the steepest rate hikes in decades threaten growth. A surprise drop in initial jobless claims also pointed to resilience in the labour market. 

The Federal Reserve is expected to boost rates by 25 basis points next week amid bets the central bank is approaching the end of its tightening cycle. Yet officials are signalling that rates will stay high through the rest of this year.

Thursday’s auction of seven-year Treasury notes ensured that January will be one of the best months ever for US government debt sales. The high demand reflects investor wagers that the Fed is nearing the end of its rate hikes as inflation comes down from its peak.

Analysts’ estimates for 2023 profits continue to fall, with major regions showing negative revision momentum, according to research from Bloomberg Intelligence’s Gina Martin Adams and Gillian Wolff. In the US, for example, sell-side analysts have lowered projections by more than half since September, while the outlook for emerging markets has slumped even more.

In commodities, oil was set to end the week little changed as concerns of an economic slowdown were tempered by optimism over Chinese demand. Gold rose. BM/DM