Stocks Rise on Fed Cut Bets; Dollar Stabilizes: Markets Wrap

Article content

(Bloomberg) — Asian stocks rebounded from last week’s selloff as muted US inflation helped reignite Federal Reserve rate cut bets. The dollar steadied after a retreat.

Article content

Article content

The MSCI Asia Pacific Index snapped a six-day decline, with benchmarks in South Korea and Taiwan rising more than 1%. US equity contracts climbed after the so-called core personal consumption expenditures price index increased at the slowest pace since May, spurring a 1.1% rise in the S&P 500 Index on Friday. 

Article content

Monday’s moves offer investors some respite after a stream of robust US economic data saw the Fed scale back the number of cuts it anticipates in 2025. Overall sentiment remains cautious as investors brace for the prospect of sweeping global tariffs imposed by US President-elect Donald Trump, and as China continues to see a lackluster economic recovery. 

“Lower than expected US core PCE inflation data for November suggests that the Fed may have gotten too negative on inflation,” Shane Oliver, head of investment strategy and chief economist at AMP Ltd., wrote in a note to clients. “Our overall assessment remains that the trend in shares is still up, including for Australian shares, but expect a far more volatile and constrained ride over the year ahead.”

Asian stocks are set for their first quarterly loss since September 2023 while a gauge of the region’s currencies fell to its lowest in more than two years last week.  

In China, semiconductor and computing stocks gained after Premier Li Qiang urged more innovation and infrastructure development in these sectors. Broader equity benchmarks posted modest gains. 

Article content

Article content

“At current level, we do think there is some upside that can be driven by more policy easing and fundamental improvements,” Si Fu, China portfolio strategist at Goldman Sachs Group Inc., said in a Bloomberg TV interview. Domestic policy easing will offset some of the negative impact from US tariffs, and Goldman Sachs looks forward to more concrete measures on consumption, she added.  

Australia’s 10-year yield fell seven basis points on Monday, following a rally in US Treasuries after the PCE data on Friday. The yield on 10-year US Treasuries advanced one basis point in Asia trading.  

A Bloomberg gauge of the dollar was steady after sliding 0.5% on Friday. President Joe Biden signed funding legislation to keep the US government operating until mid-March, avoiding a year-end shutdown and kicking future spending decisions into Trump’s presidency. 

In corporate news, Singapore Post Ltd.’s shares plunged after the company fired several senior leaders following allegations related to its international e-commerce logistics parcels business. In Japan, Honda Motor Co. and Nissan Motor Co. are aiming to finalize a pact on merging the two companies in June, according to NHK. 

Article content

Elsewhere, oil edged higher after a weekly drop, as traders gauged Trump’s threat to reimpose US control over the Panama Canal.

Key events this week: 

• Singapore CPI, Monday
• Taiwan industrial production, jobless rate, Monday
• UK GDP, Monday
• Bank of Canada issues summary of deliberations, Monday
• Mexico trade, Monday
• RBA publishes minutes of Dec. rate meeting, Tuesday
• Christmas Day, Wednesday
• Bank of Japan Governor Kazuo Ueda addresses Keidanren council, Wednesday
• US initial jobless claims, Thursday
• Colombia’s central bank publishes minutes of rate meeting, Thursday
• Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
• BOJ publishes summary of opinions for December meeting, Friday
• South Korean court to hold preliminary hearing on impeachment of President Yoon Suk Yeol over his martial law declaration, Friday
• Brazil unemployment, Friday

Some of the main moves in markets: 

Stocks

• S&P 500 futures rose 0.3% as of 11:21 a.m. Tokyo time
• Japan’s Topix rose 0.7%
• Australia’s S&P/ASX 200 rose 1.2%
• Hong Kong’s Hang Seng rose 0.2%
• The Shanghai Composite was little changed
• Euro Stoxx 50 futures fell 0.1%
• Nasdaq 100 futures rose 0.5%

Article content

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0439
• The Japanese yen was little changed at 156.41 per dollar
• The offshore yuan fell 0.1% to 7.3017 per dollar
• The Australian dollar was little changed at $0.6257

Cryptocurrencies

• Bitcoin fell 1.2% to $93,949.81
• Ether fell 1.1% to $3,244.4

Bonds

• The yield on 10-year Treasuries was little changed at 4.53%
• Australia’s 10-year yield declined nine basis points to 4.41%

Commodities

• West Texas Intermediate crude rose 0.5% to $69.82 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Matthew Burgess and Audrey Wan.

Article content