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Stocks climb amid buoyant sentiment; dollar slips: markets wrap

Stocks climb amid buoyant sentiment; dollar slips: markets wrap
A man walks in front of an exchange office with an electronic panel displaying currency exchange rates for US dollar and euro against Russian ruble in Moscow, Russia, 22 December 2022. (Photo: EPA-EFE / Maxim Shipenkov)

Asian equities advanced with European and US stock futures as positive momentum picked up on Tuesday following a late recovery in post-holiday trading on Wall Street.

The dollar edged down after three days of gains, Treasury yields ticked lower and Bitcoin punched above $30,000 for the first time since June as it rallied more than 80% since the start of the year.

Japanese shares climbed following the dovish stance of the new Bank of Japan governor, Kazuo Ueda, who signalled that any significant changes to monetary policy may be unlikely for now. The yen trimmed some of its loss of more than 1% from Monday when Ueda spoke.

South Korea’s Kospi moved higher as the central bank held interest rates unchanged while the Hong Kong and Australian markets showed strong gains after the Easter long weekend.

Shares in Shanghai fluctuated amid focus on Chinese inflation data. Consumer prices were softer than expectations and deflation in factory-gate prices matched estimates, likely keeping the stimulus option open for policymakers. 

After spending most of the day in the red, the S&P 500 eked out a gain in the final minutes of the US session. The Nasdaq 100 pared losses into the close, ending marginally lower as an Apple Inc report that personal computer shipments fell sharply weighed on the tech-heavy benchmark. 

Markets are pricing for a strong likelihood the Federal Reserve will hike interest rates by a quarter-point May 3. It’s a stark turnaround from March 22 when the Fed set its policy band at 4.75%-5% and the odds of a May rate hike almost vanished amid the turmoil in the banking sector.  

The yield on policy-sensitive two-year Treasuries eased back below 4% Tuesday after climbing on Monday as traders positioned for the Fed to hike.

Investors are awaiting Wednesday’s report on consumer prices, which is expected to show a 0.4% monthly increase in the core consumer price index, for more assurance on the Fed’s rate path. Meanwhile, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc will kick off reporting for the banking sector on Friday, offering insights on the health of the financial system.

In a report on Monday, the International Monetary Fund put forward that rates in the US and other industrial countries will revert toward ultra-low levels instead of the 1.5% to 2% real neutral interest rate former US Treasury Secretary Lawrence Summers has suggested.

Elsewhere in markets, oil trimmed some of a recent loss, with West Texas Intermediate trading back around $80 a barrel. Gold was slightly higher and near $2,000 an ounce. BM/DM


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