Asia shares echo US rally, China prices decline: markets wrap
Stocks in Asia advanced after US equities hit their hottest winning streak in two years, as investors cling to hopes that interest rates have peaked. Meanwhile, China slid back into deflation.
Shares in Australia, Japan and South Korea all rose, while those in China traded in tight ranges in opening trade. These moves followed a 0.1% gain for the S&P 500 on Wednesday, its eighth consecutive advance and the best run for the index since November 2021.
Consumer prices in China fell more than expected for October, in a further sign of deflation across the world’s second-largest economy. The consumer price index slipped into minus territory in July and has been teetering on and off the edge of negative year-on-year growth. Producer prices also fell, but slightly less than anticipated.
Australian and New Zealand bonds climbed, mirroring Wednesday’s moves in Treasuries that held into Asia’s morning session. US ten-year yields fell eight basis points to below 4.5% on Wednesday after a $40-billion auction — despite mixed metrics, which included a slightly higher-than-anticipated rate of 4.519%, signaling weaker-than-expected demand. The 30-year yield hit the lowest in over a month.
The Bloomberg dollar index inched lower as major currencies gained ground against the greenback.
The apparent calm was helped along by swaps traders pricing in almost no chance of an interest-rate increase in December, and no further hikes next year. Those forecasts come ahead of comments from central bankers. Fed chair Jerome Powell will appear on a panel discussing monetary policy challenges later on Thursday.
“It will be interesting to hear if he makes any comments about the recent move in longer-term interest rates,” said Matt Maley at Miller Tabak + Co. “If his tone is a bit more hawkish than it was last week, it could be a catalyst for the kind of ‘breather’ in the markets we’re thinking could/should take place.”
Atlanta Fed President Raphael Bostic and his Richmond counterpart Tom Barkin are also slated to speak on Thursday, as is Bank of England chief economist Huw Pill.
Elsewhere, a lacklustre outlook for ARM Holdings Plc weighed on the stock of its biggest investor, SoftBank Group, which fell in early trading in Tokyo.
In commodities, Brent crude traded around $80 a barrel after slumping on Wednesday, while West Texas Intermediate, the US benchmark, edged higher to about $76, near its three-month low.
Corporate earnings were another factor buoying US equities. More than four in five companies within the S&P 500 that have reported results have topped estimates. Businesses outpacing profit forecasts included Walt Disney Co, which reported late on Wednesday. Ride-hail company Lyft and Instacart also reported better-than-expected earnings.
In Asia, the Philippine economy grew faster than expected in the third quarter, thanks to a boost from state spending that put the nation back on track to post southeast Asia’s quickest expansion this year.