Business Maverick

Business Maverick

Asia stocks track US gains, Aussie outperforms: markets wrap

Asia stocks track US gains, Aussie outperforms: markets wrap
Stock price information displayed in the lobby of the Euronext NV stock exchange in Paris, France, on Wednesday, 14 December 2022. (Photo: Nathan Laine/Bloomberg)

Stocks in Asia rose, tracking similar gains in the US as investors continued to weigh the potential for a soft landing given expectations for higher interest rates. 

An Asia equity benchmark is on course for the biggest increase in more than a week. US contracts ticked higher following a 0.3% advance for the S&P 500 and a 0.7% gain for the tech-heavy Nasdaq 100 on Monday. The rebound comes after recent sell offs sparked by rate-hike fears.

“As the tightening of US monetary policy is being smoothly priced in, some investors might start to take more risk,” said Hideyuki Ishiguro, a senior strategist at Nomura Asset Management. “Growth stocks such as semiconductor-related names might rise, while value stocks such as financials are likely to fall.”

Traders are now pricing US rates to peak at 5.4% this year, compared with about 5% just a month ago. Federal Reserve governor Philip Jefferson firmly stood by the central bank’s 2% inflation goal on Monday. A series of hawkish Fed speeches this month has trimmed January’s gains across markets. 

The Bloomberg Dollar Spot Index was little changed, after falling 0.3% on Monday. The Australian dollar outperformed among the Group-of-10 currencies after the nation’s retail sales beat estimates. Yields on Australian and New Zealand 10-year bonds steadied. 

US data on Monday further outlined the challenge facing the central bank. Pending home sales increased in January by the most since June 2020. Durable goods orders fell, but after accounting for a drop in transportation equipment rose more than expected. Orders placed with factories for business equipment also rose.

US wholesale inventories and consumer confidence data will be released later Tuesday. On Thursday, US initial jobless claims will shine further light on the health of the robust labour market. 

Treasury yields ticked higher after the 10-year yields fell three basis points on Monday as the benchmark pulled back from the 4% mark. Equity indexes across Asia, from Japan to Hong Kong advanced. The Chinese city said it will stop requiring masks to be worn in public places from Wednesday, drawing to a close Covid restrictions that had damaged its economy. 

Investors will be keeping a close eye on Adani Group shares as the conglomerate continues an investor roadshow in Asia. Executives said in sessions on Monday that it has enough money to repay debts for the next three years in addition to an $800-million cash pile. 

Meanwhile, developer China Evergrande Group has yet to reach an agreement with major creditors on a debt restructuring framework as key deadlines loom. The company, which is at the epicentre of China’s real estate crisis, has said it wanted to get support from the noteholders by early March and it faces a March 20 court hearing in Hong Kong on a winding-up petition. 

Elsewhere, oil was set for a fourth straight monthly decline as concerns about tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in China. Gold headed for its worst month since the middle of 2021. BM/DM

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