(Bloomberg) — Asian equities were primed to gain on Thursday as a weaker yen and Beijing stimulus measures supported the region’s two largest stock markets.
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Equity futures for Japan, Hong Kong and Australia all advanced, placing Asian equities on track to resume a rally over the past week that stalled in the prior session. Gains for Hong Kong futures came even as a benchmark of US-listed Chinese companies fell, a possible sign of fatigue for the stimulus-driven rally that has lifted Chinese equities this week.
A gauge of the region’s stocks was little changed Wednesday after advancing in the preceding four sessions to trade near the highest level since early 2022. US equity futures edged higher in early Asian trading after the S&P 500 fell slightly and the Nasdaq 100 rose. Shares in Micron Technology Inc soared more than 10% in post-market trading Wednesday on a strong revenue forecast delivered after markets closed.
Treasury yields advanced across the curve on Wednesday, supported gains in the dollar, as investors faced an onslaught of new bond supply from an auction of five-year notes. An index of greenback strength was little changed after climbing 0.7% Wednesday.
The yen was steady early Thursday after falling more than 1% against the dollar in its previous session. Softness in the Japanese currency comes amid signs the Bank of Japan is in no rush to further increase interest rates.
Investors in the US parsed fresh data on Wednesday for clues on the economy and housing market. Sales of new homes in the US fell last month while a separate set of data showed that mortgage rates have dropped for eight consecutive weeks, spurring demand for purchasing a home.
“One of the things we’re watching is buyers catching up to the idea that mortgage rates are lower and that the break we’ve recently gotten in mortgage rates might be a lot of what we are expecting to get,” Skylar Olsen, chief economist at Zillow, said on Bloomberg Television. “Mortgage rates are not expected to go too much lower from here because they moved early with that anticipation.”
China Stimulus
With China’s central bank recently surprising the market with its broad package of monetary stimulus steps, more fiscal measures may come in the next few days as President Xi Jinping’s 24-member Politburo is set to meet ahead of the weeklong holiday.
In a rare announcement of direct aid, coming just a day after unveiling a sweeping program to stimulate the world’s second-largest economy, authorities said they will give one-off cash handouts to people in extreme poverty, the state broadcaster CCTV reported Wednesday, without providing details.
Elsewhere in Asia, data set for release includes industrial production in Singapore, machine tool orders in Japan and Hong Kong trade data.
On Wednesday, Federal Reserve Governor Adriana Kugler said she “strongly supported” the US central bank’s decision last week, adding it will be appropriate to make additional rate cuts if inflation continues to ease as expected.
Going forward, the Fed’s level of success in guiding the US to a soft landing will be important in determining the outlook for other asset classes, said UBS Group AG’s Solita Marcelli.
“The market has been overestimating Fed easing for the last three years and I think probably continues to do so,” said Michael Rosen, chief investment officer at Angeles Investments. “But what’s changed a bit with the 50 basis point move was a willingness by the Fed to move faster, to be more accommodative, to be more receptive to economic conditions, as opposed to just focusing on inflation.”
In commodities, oil edged slightly lower on Thursday after plunging in the previous trading session. West Texas Intermediate, the US oil price, slipped more than 2% on Wednesday to settle below $70 a barrel. Elsewhere, gold traded steady near an all-time high as the weak US data bolstered the case for deeper interest rate cuts.
Key events this week:
ECB President Christine Lagarde speaks, Thursday
US jobless claims, durable goods, revised GDP, Thursday
Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
China industrial profits, Friday
Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 8:30 a.m. Tokyo time
Hang Seng futures rose 0.7%
S&P/ASX 200 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1131
The Japanese yen was little changed at 144.67 per dollar
The offshore yuan was little changed at 7.0333 per dollar
The Australian dollar was unchanged at $0.6823
Cryptocurrencies
Bitcoin fell 0.6% to $63,084.43
Ether fell 0.1% to $2,576.89
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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