(Bloomberg) — Equities in Asia traded mixed Friday in a sign investors are rethinking the optimism that propelled the region’s shares higher in the prior session, as fresh signs of persistent inflation appeared in the US.
Most Read from Bloomberg
Shares in Australia were little changed while Japanese stocks nudged higher. Futures contracts for Hong Kong equities declined. The moves followed Thursday’s sharp rally for a gauge of the region’s shares, which touched the highest level in almost two years.
Contracts for US stocks rose in early Asian trading after the S&P 500 index rose 0.3% to a fresh high Thursday — its 20th of the year — led by gains in industrials and banks. Reddit Inc. shares soared 48% on their debut. Other tech stocks faltered, with Apple Inc. and Alphabet Inc. falling against the backdrop of heightened regulatory pressure.
The US Justice Department and 16 attorneys general are suing the iPhone maker for violating antitrust laws. In Europe, the company is said to be facing probes about whether it’s complying with the region’s Digital Markets Act. Apple shares fell more than 4%, wiping $115 billion in market value.
US economic data supported the argument the Fed may be forced to backtrack on its rate reduction forecasts a day after the central bank indicated three 25 basis point cuts in 2024. Housing, manufacturing and labor-market data released Thursday in the US pointed to a resilient economy that could prompt the Federal Reserve to reduce interest rates slower than the market expects.
The data pushed Treasuries down. The two-year Treasury yield rose three basis points Thursday, while the 10-year was less than one basis point higher. The upward pressure on yields supported an index of the dollar, which rose 0.4% in its previous session before steadying Friday.
The yen inched higher to trade at around 151 per dollar in early Friday trading as Japan’s inflation accelerated to the quickest pace in four months. Markets will keep focused on whether the Bank of Japan might follow its first interest rate hike since 2007 with further raises later this year.
Itchy Fingers
Treasury Secretary Lawrence Summers said the Fed has “itchy fingers to start cutting rates,” which may not be necessary for some time given the strong economy and buoyant financial markets. “I don’t know why we’re in such a hurry,” Summers said.
Societe Generale SA increased its S&P 500 year-end forecast to 5,500 from 4,750 — the highest forecast among strategists tracked by Bloomberg. “US exceptionalism is going from strength to strength,” wrote Manish Kabra, head of US equity strategy for the French bank. “Despite widespread market optimism, we view this as rational rather than excessive.”
Central banks remained firmly in focus. The Swiss National Bank expectedly cut interest rates, weakening its currency against peers, while Mexico’s central bank also cut rates as expected. The moves could be a prelude to policy easing in the UK, Europe and the US.
The Bank of England kept rates at a 16-year high of 5.25% Thursday. Two BOE hawks dropped their demands for hikes in a further sign the central bank is closer to rate cuts. The pound weakened on the news.
Ahead in Asia, the Reserve Bank of Australia will release a financial stability review, while Taiwan will publish February jobs data.
In commodities, oil held a two-day drop, with traders assessing the outlook for global interest rates and geopolitical tensions in the Middle East. Elsewhere, Bitcoin trading below $66,000, while gold fell after surging above $2,200 an ounce for the first time.
Key events this week:
-
Japan CPI, Friday
-
Germany IFO business climate, Friday
-
Atlanta Fed President Raphael Bostic speaks, Friday
-
ECB’s Robert Holzmann and Philip Lane speak, Friday
Some of the main moves in markets:
Stocks
-
S&P 500 futures rose 0.1% as of 9:12 a.m. Tokyo time
-
Hang Seng futures fell 0.7%
-
Japan’s Topix rose 0.2%
-
Australia’s S&P/ASX 200 fell 0.2%
-
Euro Stoxx 50 futures rose 1%
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro was little changed at $1.0864
-
The Japanese yen was little changed at 151.51 per dollar
-
The offshore yuan was little changed at 7.2218 per dollar
-
The Australian dollar was little changed at $0.6572
Cryptocurrencies
-
Bitcoin rose 0.4% to $65,742.57
-
Ether rose 0.8% to $3,513.01
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
