(Bloomberg) – Asian equities caught up to a strong rally in US and European equities that began to fade as budding hopes that central banks would moderate the pace of interest rate hikes receded further.
Bloomberg’s Most Read
U.S. and European stock futures fell on Wednesday, shining in the best two-day run for the S&P 500 since March 2020 and the strongest session for European stocks in six months. Stocks gained ground across Asia. Australian and Japanese stocks traded higher and Hong Kong stocks headed for their best session since March after a one-day break.
The action reflects the see-saw outlook for monetary policy as investors scan central bank comments and economic data for signs that interest rates will begin to peak.
A drop in U.S. job vacancies helped fuel such sentiment on Tuesday, which was tempered by comments from a Federal Reserve official who signaled further tightening was ahead. The Reserve Bank of New Zealand raised rates to the highest level since 2015, as expected, failing to match its Australian counterpart, which slowed the pace of increases on Tuesday in a surprise that lifted risky assets.
“It’s a dangerous bet to make last Friday’s low the ultimate low,” said Charles Lemonides, founder of hedge fund ValueWorks. “We are likely in the midst of a major relief rally, but the Fed has said it will continue to tighten until inflation is out of the system.”
The Bloomberg Dollar Spot Index edged lower and fell 3% from a high last week. The pound fell after climbing to the highest level in two weeks on Tuesday. The price of oil fell after surging on Tuesday as OPEC+ said it was considering a production cut of up to 2 million barrels a day, double previous estimates.
Growing fears of a recession could benefit traditional safe havens, including Treasuries and the Japanese yen, according to Fidelity International, which said Treasuries make up about 2% of the company’s global multi-asset income fund. society, compared to zero just a few months ago.
Investors will be heavily focused on Friday’s U.S. jobs data which economists said should show a slowdown in new job creation.
“For the market to continue to rise, employment data will need to be in line with or below expectations,” said Lindsey Bell, head of markets and currency strategist at Ally. The market is currently pricing in a “golden loop” labor market report that is “neither too hot nor too cold”.
Key events this week:
-
Eurozone services PMI, Wednesday
-
OPEC+ meeting starts Wednesday
-
Fed’s Raphael Bostic speaks on Wednesday
-
The Reserve Bank of New Zealand meets on Wednesday
-
Eurozone retail sales, Thursday
-
First unemployment claims in the United States, Thursday
-
The Fed’s Charles Evans, Lisa Cook and Loretta Mester speak at events on Thursday
-
U.S. unemployment, wholesale inventories, nonfarm payrolls, Friday
-
BOE Deputy Governor Dave Ramsden speaks at an event on Friday
-
The Fed’s John Williams speaks at an event, Friday
Will earnings disappoint and push stocks to new lows? This week’s MLIV Pulse survey asks about corporate earnings. It’s brief and we don’t collect your name or contact information. Please click here to share your views.
Some of the major movements in the markets:
Shares
-
S&P 500 futures fell 0.4% at 2:35 p.m. in Tokyo. The S&P 500 gained 3.1%
-
Nasdaq 100 futures fell 0.4%. The Nasdaq 100 gains 3.1%
-
Japan’s Topix climbed 0.4%
-
Australia’s S&P/ASX 200 gained 1.7%
-
Hong Kong’s Hang Seng index jumped 6%
-
South Korea’s Kospi index rose 0.3%
-
Euro Stoxx 50 futures fell 0.4%
Currencies
-
The Bloomberg Dollar Spot Index climbed 0.1%
-
The Japanese yen traded at 144.10 to the dollar
-
The offshore yuan remained stable at 7.0441 per dollar
-
The euro fell 0.1% to $0.9975
Cryptocurrencies
-
Bitcoin fell 0.8% to $20,178.96
-
Ether fell 0.6% to $1,353.19
Obligations
Goods
-
West Texas Intermediate crude fell 0.2% to $86.36 a barrel
-
Gold futures fell slightly to $1,720.91 an ounce
Bloomberg Businessweek’s Most Read
©2022 Bloomberg LP