Stocks rise, dollar falls as signs of turning point emerge: Market wrap-up

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(Bloomberg) — Asian stocks rose and the dollar weakened on speculation the Federal Reserve is about to end its tightening cycle. Japan’s Nikkei 225 index hit a 33-year high.

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Stocks in the region closed at a two-month high after dovish comments from Federal Reserve officials last week bolstered bets that the central bank will end its rate hikes. The dollar fell against all Group of 10 currencies, while indexes fell as growth in emerging market markets rose to the highest level since February.

Michael Barr, the Fed’s vice chairman for supervision, said on Friday that officials may be nearing the end of their tightening campaign, with traders now pricing in about a 30% chance of the Fed’s first rate cut in March. However, San Francisco Fed President Mary Daly said policymakers are unsure whether inflation will reach the 2% target.

U.S. Treasuries edged lower ahead of a 20-year bond auction that will help gauge whether investors are confident the 2023 sell-off is over once and for all. The U.S. Treasury market is expected to report its first monthly return in November, ending a six-month losing streak. New Zealand bonds also retreated.

Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., said investors should expect continued downward pressure on U.S. Treasury yields and the dollar as the Fed’s dovish rhetoric remains.

However, the market’s optimism appears to have been overdone. “Is a month of somewhat favorable inflation data really worth such a large rate change? We don’t think it should be, but it is. We must respect the move even though we completely disagree,” he wrote in a note. “

Nikkei hits 33-year high

The Nikkei 225 briefly surpassed its intraday peak in June and reached its highest level since 1990, expanding its gains this year to more than 28%. The index was boosted by a prolonged weakness in the yen, solid corporate earnings and corporate governance reforms championed by the Tokyo Stock Exchange.

The offshore yuan strengthened after the People’s Bank of China raised the yuan’s daily reference rate to its highest level since August. China’s commercial banks kept their benchmark lending rates unchanged on Monday, in line with the central bank’s decision this month to keep policy unchanged on rates that support other means of stimulating spending.

“Like most developed markets and Asian peers, the yuan may have passed a turning point against the dollar,” said Fiona Lim, senior foreign exchange analyst at Maybank Bhd. “Although it faces some downward pressure due to its own economic weakness, It has policy differences with the Federal Reserve, and the yuan has also been greatly affected by cyclical pressures.”

U.S. stock futures edged lower in Asia after the S&P 500 rose above 4,500 points on Friday, marking a third straight weekly gain.

In Argentina, liberal candidate Javier Mire won Sunday’s presidential runoff, beating Economy Minister Sergio Massa. There was no immediate market reaction due to the holiday.

Oil prices rose as investors expected an OPEC+ supply meeting to shape market balance in 2024.

Investors are also concerned about the impact of tensions over OpenAI. According to reports, OpenAI interim CEO Mira Murati plans to rehire the ousted former Sam Altman and former president Greg Brockman, but the positions have not yet been finalized.

Chinese smartphone giant Xiaomi Corp will report earnings on Monday, while Nvidia Corp will report results on Tuesday.

Trading is likely to become lighter this weekend as the U.S. Thanksgiving holiday approaches on Thursday.

Main events this week:

  • ECB Governing Council members Pablo Hernández de Cos, François Villeroy de Gachau and Boris Vujicic spoke at different events on Monday

  • Bank of England Governor Andrew Bailey speaks on Monday

  • American Federation Leading Index, Monday

  • Hong Kong Consumer Price Index, Tuesday

  • European Central Bank President Christine Lagarde speaks on Tuesday

  • Canadian Consumer Price Index, Tuesday

  • Minutes of the Fed’s November policy meeting, Tuesday

  • Nvidia earnings report on Tuesday

  • Eurozone consumer confidence on Wednesday

  • U.S. jobless claims, University of Michigan consumer sentiment, durable goods, Wednesday

  • Eurozone PMI, Thursday

  • UK S&P Global/CIPS Manufacturing PMI, Thursday

  • The European Central Bank releases the minutes of its October policy meeting on Thursday

  • American Thanksgiving holiday, Thursday

  • Japan Consumer Price Index, Friday

  • Germany GDP on Friday

  • Friday’s U.S. manufacturing PMI

  • Black Friday sales start on Friday

Some major trends in the market:

stock

  • S&P 500 futures were little changed as of 1:44 p.m. Tokyo time. The S&P 500 rose 0.1% on Friday

  • Nasdaq 100 futures down 0.3% Nasdaq 100 index little changed

  • Japan’s Topix fell 0.7%

  • Hong Kong’s Hang Seng Index rose 1.5%

  • China’s Shanghai Composite Index rose 0.5%

  • Australia’s S&P/ASX 200 index little changed

currency

  • The Bloomberg Dollar Spot Index fell 0.3%

  • EUR/USD rose 0.1% to $1.0927

  • The yen rose 0.5% to 148.93 per dollar

  • The offshore yuan rose 0.5% to 7.1779 against the dollar

  • AUD/USD rose 0.6% to $0.6553

cryptocurrency

  • Bitcoin rises 0.6% to $37,213.45

  • Ethereum rises 1% to $2,004.1

bond

  • The 10-year Treasury yield rose 1 basis point to 4.45%

  • Japan’s 10-year government bond yield remains unchanged at 0.750%

  • Australia’s 10-year government bond yield rose four basis points to 4.50%

commodity

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess, Aya Wagatsuma and Qizi Sun.

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