Stocks rose in Asia following gains on Wall Street amid optimism the Federal Reserve is about to end its tightening cycle. Japan’s Nikkei 225 Stock Average climbed to a fresh 33-year high.
The Nikkei 225 exceeded June’s intraday peak as solid corporate earnings and a weakening yen boosted the gauge’s year-to-date advance to almost 30%. Hong Kong and mainland Chinese shares also rose from the open. US futures were little changed after the S&P 500 rose above 4,500 on Friday to cap its third straight weekly gains.
Investors have been adding to bets the Fed is done with rate hikes after a number of recent data points have suggested the world’s largest economy is slowing. Bloomberg’s dollar index has erased its gains for the year and indexes of US and global bond returns have recouped year-to-date losses.
Fed vice chair for supervision Michael Barr said on Friday officials are likely at or near the end of their tightening campaign. Still, San Francisco Fed president Mary Daly said legislators aren’t certain inflation is on a path to their 2% target.
“We’ve seen a little bit of crack in employment, not enough that the Fed is going to want to start cutting rates,” Dana D’Auria, co-chief investment officer at Envest Net, said on Bloomberg Television. Still, “we can rest easy on any additional rate hikes”, she said.
Treasuries edged lower in early Monday trade before a 20-year bond auction, which will help gauge whether investors are confident 2023’s selloff is over once and for all. Australian and New Zealand bonds also retreated.
The offshore yuan rose after the People’s Bank of China boosted its daily reference rate for the currency to the strongest level since August. The nation’s commercial lenders also on Monday kept their benchmark lending rates unchanged, in line with the central bank’s decision earlier this month to maintain policy rates in favor of other means to support stimulus spending.
Oil rose as investors looked ahead to an OPEC+ meeting on supply that will shape market balances into 2024.
Investors are also watching for any fallout from Sam Altman’s ousting as chief executive of OpenAI. A group of the company’s executives and investors racing to get him reinstated has reached an impasse over the makeup and role of the board, according to people familiar with the negotiations.
In the Middle East, a deal with Hamas to release hostages taken on 7 October during the attack on Israel may be the closest yet and would require a multi-day pause in the fighting in Gaza, US deputy national security advisor Jon Finer said on Sunday.
Nvidia Corp. will announce earnings this week as will Chinese smartphone giant Xiaomi Corp. Trading is likely to become more muted toward the end of the week with the US Thanksgiving Holiday on Thursday.
Elsewhere, Javier Milei, a libertarian candidate with radical solutions to Argentina’s economic crisis, defeated Economy Minister Sergio Massa to win Sunday’s presidential runoff.