(Bloomberg) — Asian shares got off to a tepid start in the fourth quarter while a weaker yen boosted Japanese indexes.
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The Nikkei 225 index rose as much as 1.9%, a day after the benchmark slumped almost 5% following the ruling party’s leadership race. A gauge of Asian equities was little changed after advancing in early trade. Taiwan shares gained while those in Australia slipped. China and Hong Kong are closed for holidays. US equity futures swung between gains and losses.
The yen weakened slightly against the dollar on Tuesday after Federal Reserve Chair Jerome Powell said the central bank will lower interest rates “over time,” while re-emphasizing that the overall economy remains on solid footing. Shigeru Ishiba is set to be confirmed as Japan’s new prime minister on Tuesday after the leadership battle wrong-footing investors betting on more monetary stimulus from his rival.
“I still think that global risk assets perform well heading into the end of the year as the macro backdrop and growth prove to be more resilient than previously expected,” said David Chao, a strategist at Invesco Asset Management. “Thus the near-term market narrative has shifted from questions about a slowing US economy to the size and velocity of the Fed’s rate cuts for the rest of the year.”
Markets were also bracing for any impact from news that Israel had begun “targeted ground raids” in Lebanon. Oil steadied as investors assessed the risks of a wider conflict in the Middle East.
In Australia, retail sales rose more than expected in August as tax cuts and warmer weather encouraged households to spend more. Australia’s dollar outperformed its major peers on the data. Shares of Australian iron ore miners fell as the metal edged lower, after rising to the highest since early July on Monday.
In Japan, shares of trading houses extended gains after Berkshire Hathaway Inc. hired banks for a potential yen bond offering.
China’s markets are on a week-long holiday after the biggest surge in 16 years on Monday. The MSCI China Index beat an emerging-market gauge which excludes the nation’s equities by almost 22 percentage points in September, the biggest margin of outperformance since June 1999, according to data compiled by Bloomberg.
In the US, the S&P 500 secured its fourth consecutive quarter of advances — the longest such winning stretch since 2021. The tech-heavy Nasdaq 100 notched a similar run.
“The bull market has survived the year’s historically weakest quarter, the third quarter, and it is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending,” said Emily Bowersock Hill at Bowersock Capital Partners.
“We expect the fourth quarter to be quite similar to the third quarter – elevated volatility, but with a strong finish,” she added.
Key events this week:
Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins speak Tuesday
ECB policy makers speaking include Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel on Tuesday
BOE chief economist Huw Pill speaks Tuesday
South Korea CPI, S&P Global Manufacturing PMI on Wednesday
Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
US nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 12:44 p.m. Tokyo time
Japan’s Topix rose 1.7%
Australia’s S&P/ASX 200 fell 0.9%
Euro Stoxx 50 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1138
The Japanese yen fell 0.4% to 144.27 per dollar
The offshore yuan was little changed at 7.0139 per dollar
Cryptocurrencies
Bitcoin fell 0.1% to $63,690.51
Ether rose 0.7% to $2,630.72
Bonds
The yield on 10-year Treasuries was little changed at 3.78%
Japan’s 10-year yield was unchanged at 0.850%
Australia’s 10-year yield advanced three basis points to 4.00%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott.
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