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Asia mixed, US stocks hit record on inflation data: markets wrap

Asia mixed, US stocks hit record on inflation data: markets wrap
A neon sign indicates that Bitcoin is accepted inside the venue of the Paralelni Polis project, an organisation combining art, social sciences and modern technology, in Prague, Czech Republic, on Friday, 25 January 2024. (Photo: Milan Jaros/Bloomberg)

Asian equities were steady on Friday after US stocks ended February with fresh highs as the Federal Reserve’s preferred inflation gauge met consensus forecasts.

China and Hong Kong opened slightly lower, while Australian equities traded within tight ranges. The Nikkei benchmark of Japanese stocks traded 1.6% higher on Friday after a two-day losing streak. 

US stock futures were steady after both the S&P 500 and Nasdaq 100 indexes closed at record levels, helped by Nvidia Corp., which also set its highest closing price on the day. The two benchmarks ended February with their fourth consecutive monthly advance.

Treasuries steadied in Asian trading after rising for a second session on Thursday, helped along by jobless claims data that indicated labour-market softening. Traders also pointed to the possibility that short covering was behind the gains. An index of the dollar was little changed. 

The Bank of Japan’s not already in sight, governor Kazuo Ueda said. His comment may temper speculation the bank’s first rate hike since 2007 could come as early as March. The yen weakened against the greenback Friday.

“We are not yet in a position to foresee the achievement of a sustainable and stable inflation target,” Ueda said on Thursday after meeting with a G20 central bankers and finance chiefs in Sao Paulo, Brazil. “We will continue to seek confirmation whether the virtuous cycle between wages and price began to turn.”

In Asia, data due on Friday include inflation figures for Indonesia and Pakistan, and Hong Kong retail sales. Markets are closed in South Korea.

China’s February PMI data beat estimates, with manufacturing still in contraction territory, and non-manufacturing in expansion mode.

China’s home sales slump dragged on in February, even as regulators stepped up efforts to salvage the beleaguered property market. The value of new home sales from the 100 biggest real estate companies slid 60% from a year earlier.

US stocks were buoyed by US personal consumption expenditures index data released on Thursday. Although it showed underlying inflation running at the fastest pace in a year, the reading met consensus expectations from economists and failed to dent the broader dis-inflationary trend underpinning rate-cut forecasts.

“For markets keenly focused on when the Fed will transition toward easing rates, this report will help restore confidence that it isn’t ‘if’ the Fed will begin to cut rates in 2024, but ‘when’,” said Quincy Krosby at LPL Financial.

Federal Reserve Bank of San Francisco president Mary Daly said central bank officials are ready to lower interest rates as needed but emphasised there’s no urgent need to cut given the strength of the economy. Her Atlanta counterpart Raphael Bostic said the central bank could begin cutting this summer.

Bitcoin held at above $61,000 as a fresh appetite for the cryptocurrency rippled across markets while BlackRock Inc.’s iShares Bitcoin Trust netted a record $612-million inflow on Wednesday.

West Texas Intermediate, the US oil price, was little changed on Friday. The US Energy Information Administration said oil demand touched a four-year high in 2023 and would likely hold near that level this year. Elsewhere, gold steadied after rising to a three-week high to trade just under $2,044 per ounce.

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