Asian stocks advance as focus switches to US CPI: markets wrap
Asian shares rose as markets shrugged off faster-than-expected US producer price data and took heart from less hawkish Federal Reserve commentary. A move by China’s sovereign wealth fund to buy shares of the country’s largest banks fueled further optimism.
Stock benchmarks climbed at least 0.8% in Japan and South Korea, putting MSCI’s Asian equity index on course for a sixth day of gains. The Hang Seng Index jumped as much as 2.1% after China’s state-owned Central Huijin Investment Ltd. increased its stake in the nation’s biggest banks for the first time since 2015. Oil fell for a third day, erasing all of the surge on Monday that followed Hamas’ attack on Israel.
“Central Huijin’s modest yet symbolic investments are very likely aimed at supporting share prices, which has already led to a positive market response,” Redmond Wong, a market strategist at Saxo Capital Markets in Hong Kong, wrote in a note. “This move, reminiscent of its actions during the 2015 Chinese equity market turmoil, signifies the government’s desire to maintain market stability.”
Traders’ focus is now turning to Thursday’s US consumer price data, which economists are forecasting will show a further easing in inflation. Fed minutes published on Wednesday showed officials agreed last month’s policy should remain restrictive for some time, while noting the risks of overtightening now had to be balanced against keeping inflation on a downward path.
US CPI is forecast to have slowed to an annual rate of 3.6% in September from 3.7% the previous month, according to a Bloomberg survey. Data published on Wednesday showed prices paid to producers rose by more than forecast in September, bolstered by higher energy costs.
Futures for US stocks advanced after the S&P 500 rose for a fourth day on Wednesday, its longest winning streak since August on the back of the Fed officials’ comments.
Fed officials are taking a more patient approach now that rates are at or near their peak, Boston Fed president Susan Collins said Wednesday. Her Atlanta counterpart Raphael Bostic said the central bank doesn’t need to keep tightening unless inflation’s descent starts to stall.
“The Fed is near the end of their rate hiking campaign and the events of the past weekend likely solidify this view,” said Jeffrey Roach, chief economist at LPL Financial. “The risk of overtightening appears to be in balance with the risk of insufficient tightening.”
The dollar edged lower against most of its Group-of-10 peers, while the yen held near 149 to the greenback. Treasury 10-year yields were little changed at 4.57% after dropping to a two-week low of 4.54% on Wednesday.
West Texas Intermediate slipped below $83 a barrel after slumping Wednesday following a New York Times report that Iran may have been surprised by the assault. Gold was little changed.