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Asian stocks rise, US futures waver before Fed: markets wrap

Asian stocks rise, US futures waver before Fed: markets wrap
An electronic stock board outside a securities firm in Tokyo, Japan, on Monday, Nov. 21, 2022. (Photo: SeongJoon Cho/Bloomberg)

Stocks in Asia advanced after US shares ended January on a high note as signs of cooling inflation encouraged risk appetite ahead of the Federal Reserve’s meeting on Wednesday. 

Benchmarks in Australia and Japan rose while gauges in Hong Kong and mainland China fluctuated. Contracts for the S&P 500 fell after the index climbed 1.5% on Tuesday. Nasdaq 100 futures also eased lower after the tech-heavy benchmark rallied 1.6% to cap its best month since July and strongest start to a year since 2001.

The drop for US futures followed a series of corporate earnings reports after US markets closed that included a disappointing outlook from Electronic Arts and the first-ever forecast revenue decline for Snap.

Contracts for the Nifty 50 index of Indian blue chips also rose. Investors will be focused on Adani Enterprises, a member of the benchmark, which successfully raised $2.5-billion in a closely watched follow-on equity sale on Tuesday. The transaction provides some relief for Gautam Adani after fraud allegations by short seller Hindenburg Research.

Australian and New Zealand yields fell and a rally in Treasuries steadied after the 10-year yield dropped three basis points on Tuesday. An index of the dollar traded flat and the yen strengthened. 

Gains for US stocks were helped along by wage cost data that undershot forecasts. Separate figures showed the US housing market continued to cool. Another report highlighted consumer confidence unexpectedly falling.

The encouraging signs indicate the Fed’s rate hikes over the past year have begun to curtail inflation. The central bank is set to unveil a 25 basis point rate increase Wednesday and investors will be keenly parsing Fed Chair Jerome Powell’s comments for signs the tightening cycle may soon pause

“We’re getting closer to the terminal rate,” Sassan Ghahramani, chief executive of SGH Macro Advisors, said in an interview with Bloomberg Television. “Data that has come out does not justify 50 basis point hikes. If anything, I’d say it’s virtually a 100% certainty they do 25.”

Fourth-quarter earnings on Tuesday in the US were mixed. McDonald’s and Caterpillar fell short of profit estimates while General Motors and Exxon Mobil outpaced forecasts with the oil major posting its highest ever full-year profit. BM/DM

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