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Asia stocks mixed ahead of US CPI, bitcoin gains: markets wrap

Asia stocks mixed ahead of US CPI, bitcoin gains: markets wrap
An employee holds a bundle of 100 euro banknotes at the Ninja Money Exchange, operated by Interbank HD, in the Shinjuku district of Tokyo, Japan, on Thursday, 9 June 2022. (Photo: Toru Hanai/Bloomberg)

Equities in Asia were mixed, while Treasuries steadied after Wednesday’s gains ahead of the Federal Reserve’s key inflation metric that will help identify the path forward for interest rates. Bitcoin surged past $61,000.

Japanese and South Korean shares fell on Thursday while stocks in China surged led by small-cap names after Wednesday’s selloff amid Beijing’s ongoing crackdown on quant strategies. US equity futures ticked lower in early Asian trading after small losses for the S&P 500 and Nasdaq 100 overnight.

Chinese equities have rebounded sharply this month and are set for their biggest outperformance versus global stocks since July after authorities took a slew of measures to bolster investor sentiment. The gains over the past two weeks can build into a meaningful rally, according to Brendan Ahern, chief investment officer for Krane Fund Advisors LLC.

“Hopefully that trend does continue. If we can make money in China, more money will flow back in,” he said on Bloomberg Television. 

Bitcoin extended gains after surging above $60,000 for the first time in more than two years on Wednesday, reflecting new demand from exchange traded funds. The currency almost touched $64,000. The 2021 record high is just below $69,000.

Notable moves in Asian shares included a jump for Japanese lender Aozora Bank after a fund linked to activist investor Yoshiko Murakami reported a shareholding.

Declines for US stocks overnight came as data showed strong consumer spending despite a small revision to US gross domestic product growth in the fourth quarter of 2023. The report comes ahead of the Fed’s favoured inflation gauge due on Thursday and was broadly supportive of the caution voiced by Fed officials in recent weeks.

US stocks have reached a significant inflection point — poised to either “top out or broaden out”, according to Craig Johnson at Piper Sandler. Technical evidence suggests the next 10% move in the equity market is likely lower than higher, he said.

Treasuries were steady in Asia after a rally on Wednesday saw the 10-year yield falling four basis points and the policy-sensitive two-year slipping six basis points. Australian yields echoed the move in early Asian trading while New Zealand yields were largely unchanged.

Yen climbs

Foreign exchange markets were little changed early on Thursday, with the yen leading gains against the dollar among its G10 peers after Bank of Japan Board Member Hajime Takata signalled that the case for scrapping the negative interest rate policy is gaining momentum.

The greenback gained against most major currencies on Wednesday, most notably the New Zealand dollar, which fell 1.2% against the US currency. 

In Asia, economic reports due on Thursday include fourth-quarter GDP data for India, the current account balance in Thailand, and inflation data for Sri Lanka and Vietnam.

New York Fed president John Williams said on Wednesday the central bank has “a ways to go,” in its battle against inflation and Atlanta Fed chief Raphael Bostic urged patience in regard to policy tweaks. Overall, recent comments from Fed officials underscore the importance of data in guiding policy moves.

Following a jump in both the consumer and the producer price indexes, Thursday’s core personal consumption expenditures gauge will likely highlight the bumpy path the central bank faces in achieving its 2% target. The PCE is seen validating recent commentary from officials showing no rush to ease monetary policy.

“The recent data is ‘noise’ and should be ignored outside of its impact for very short-term market movements,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “We are more interested in the PCE data.”

Traders are currently pricing around 80 basis points of easing by year-end — almost in line with what officials in December indicated as the likeliest outcome. That would equate to three cuts in 2024 — as the Fed moves have historically been increments of 25 basis points. To put things in perspective, swaps were projecting almost 150 basis points of cuts this year at the start of February.

In commodities, oil extended declines on Thursday following a fall in prices for West Texas Intermediate in the previous session. Gold also stabilised after a rally in the prior session to trade around $2,035 per ounce.


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