Shares in Asia rose following gains on Wall Street, with focus shifting to key US consumer price data due later Friday. Benchmarks in Japan, South Korea, and mainland China showed modest increases, after US stocks wrapped up the first quarter on a positive note. Investors are bracing for a print of the Federal Reserve’s preferred consumer price reading for fresh clues about its policy outlook.
Several Asian markets, including Australia, Hong Kong, and Singapore, are closed Friday for a public holiday.
The gains in the region came after traders sent the S&P 500 to its 22nd record this year on the back of data showing the US economy remained healthy. A $4 trillion surge in US equity values in just three months has startled doomsayers, while leaving a host of strategists scrambling to update their 2024 targets.
“Domestic events are driving the gains in China, Japan, and South Korea with investor sentiment underpinned by the overnight gains in the US market,” said Seo Sang-Young, a market strategist at Mirae Asset Securities. End-of-quarter portfolio rebalancing also seems to be in play, Seo added.
Traders are on alert for likely swings in Japan’s currency after officials stepped up warnings this week to stem its slide. While the yen has since strengthened a little against the greenback, it remains close to levels not seen in decades.
Some recent weakening moves in the yen were speculative and not reflecting fundamentals, Japanese Finance Minister Shunichi Suzuki said Friday, adding there is no specific defense line regarding the exchange rate level.
There is a growing sense of wariness of intervention, said Taishi Fujita, associate in the global markets division for the Americas at MUFG Bank. “Even if you build a position selling the yen during a strong phase, you are likely to drop the position as it approaches 152.” He pointed out that the market may continue to hover in the low 151-yen per dollar range.
Latest data showed that consumer price growth in Tokyo moderated while staying well above the central bank’s inflation target. It may keep authorities on track to consider more rate increases after they hiked earlier this month for the first time since 2007.
On China’s corporate front, one of the nation’s biggest property firms delayed its earnings report while another posted a historic profit decline. Country Garden Holdings Co. announced late Thursday it will miss a deadline for reporting annual results, saying it needs more information. Developer China Vanke Co. said net profit tumbled 46% last year.
Swaps traders on Thursday slightly trimmed wagers that the Fed would cut rates as soon as June following Fed Governor Christopher Waller’s comments on Wednesday that there was no rush to lower interest rates. Two-year Treasury yields climbed five basis points to 4.62% in a shortened session ahead of the holiday, while the dollar extended its quarterly advance. Trading of cash Treasuries in Asia is closed due to the holiday.
The US government’s two main measures of activity — gross domestic product and consumer spending — posted strong advances at the end of last year. Consumer sentiment rose markedly toward the end of March, supported partly by the strong stock-market gains.
In addition to the release of the PCE price index, the Fed’s preferred inflation gauge, traders will also closely monitor a speech by Fed Chairman Jerome Powell later Friday.
Elsewhere, gold hit a fresh all-time high, extending a weeks-long rally fueled by bets on Fed rate cuts and deepening geopolitical tensions. Oil scored a 16% quarterly gain in the latest sign that export curbs by OPEC and its allies are reining in global supplies.
Bitcoin eased Friday after climbing to $71,555 in the previous session. Meantime, FTX co-founder Sam Bankman-Fried was sentenced to 25 years in prison for stealing billions of dollars from customers.
Key events this week:
– Good Friday. Exchanges closed in the US and many other countries in observance of the holiday. The US federal government is open.
– US personal income and spending, PCE deflator, Friday.
– San Francisco Fed President Mary Daly speaks, Friday.
– Fed Chair Jerome Powell speaks, Friday.
Some of the main moves in markets:
Stocks
Currencies
– The Bloomberg Dollar Spot Index rose 0.1%
– The euro fell 0.1% to $1.0776
– The Japanese yen was little changed at 151.30 per dollar
– The offshore yuan was little changed at 7.2581 per dollar
Cryptocurrencies
– Bitcoin fell 0.3% to $70,522.93
– Ether rose 0.5% to $3,579
As we analyze the implications of the ideas presented in this article, it becomes evident that the global market is showing resilience and positive momentum. Asian markets, following the gains on Wall Street, have experienced a rise in shares. This positive trend is expected to be reinforced by the upcoming release of key US consumer price data, which will provide valuable insights into the Federal Reserve’s policy outlook.
The US economy has shown strength, with the S&P 500 breaking records and a $4 trillion surge in equity values over just three months. This remarkable performance has defied expectations and prompted strategists to revise their targets for 2024. The gains in China, Japan, and South Korea can be attributed to investor sentiment buoyed by the overnight gains in the US market. Additionally, end-of-quarter portfolio rebalancing has further contributed to the positive market sentiment.
However, there are concerns regarding Japan’s currency and potential intervention to prevent its further slide. While the yen has seen some strengthening against the greenback, it remains at historically low levels. The market is cautiously monitoring fluctuations in the yen, and there is a sense that intervention may be imminent. Traders expect the market to hover around the low 151-yen per dollar range.
On the corporate front, China’s property sector has encountered challenges, with delays in reporting earnings and a significant decline in net profit for major firms. Country Garden Holdings Co. and China Vanke Co. both faced setbacks, and these developments have drawn attention to the state of China’s real estate market.
In terms of policymaking, traders have slightly adjusted their expectations of a rate cut by the Federal Reserve in June, following recent comments by Fed Governor Christopher Waller. The strong advances in gross domestic product and consumer spending, combined with positive consumer sentiment, have influenced this shift in expectations. The market will closely watch Jerome Powell’s speech for further insights into the Fed’s future course of action.
Gold continues its rally, reaching a fresh all-time high, driven by bets on Fed rate cuts and geopolitical tensions. Meanwhile, OPEC’s export curbs have contributed to a 16% quarterly gain in oil, signaling tighter global supplies.
In the cryptocurrency market, Bitcoin experienced a slight decline after reaching a high in the previous session. Notably, FTX co-founder Sam Bankman-Fried’s legal troubles have made headlines, with a significant sentence handed down for fraudulent activities.
Looking ahead, the market anticipates further developments in US personal income and spending, as well as the release of the PCE price index. Additionally, speeches by San Francisco Fed President Mary Daly and Fed Chair Jerome Powell are expected to provide valuable insights into the future trajectory of the economy and monetary policy.
In conclusion, the global market is showing resilience and positive momentum, supported by strong economic indicators and investor sentiment. While challenges and uncertainties persist, such as the potential intervention in Japan’s currency and China’s corporate setbacks, the overall outlook is optimistic. It is crucial for investors to closely monitor developments in key economic indicators, central bank policies, and geopolitical events for informed decision-making. As always, diversification and risk management remain essential in navigating the dynamic landscape of the global market.