Asia Stocks Gauge Gains for First Time in Six Days: Markets Wrap

  • In Business
  • 2022-09-20 01:42:15Z
  • By Bloomberg

(Bloomberg) -- Stocks climbed in Asia Tuesday following a rebound in the final hour of New York trading as investors continue to weigh the market impact of super-sized interest rate hikes from the Federal Reserve.

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MSCI Inc.'s Asia-Pacific equity index added 0.6%, the first day of gains in six sessions, led by tech stocks in Hong Kong. Japan earlier jumped more than 1% after a holiday. US futures edged higher.

Treasury 10-year yields hovered near 3.5% while the more policy-sensitive two-year rate hit the highest since 2007, amid fears that an overtightening of monetary settings raises the odds of a hard landing. The dollar was little changed.

Traders are betting the Fed will hike by 75 basis points Wednesday, signal rates are heading above 4% and will then pause. The long hold strategy is rooted in the idea the central bank would avoid the disastrous stop-go policy of the 1970s that allowed inflation to get out of hand.

Swap contracts that forecast rates over the next two years now peak around 4.5% in March 2023 -- a full point higher than was expected after the last meeting in July.

Strategists at JPMorgan Chase & Co. estimate the Fed will increase rates to 4.25% by early next year. "We expect central bank tightening and a fading of supply chain pressures to moderate job growth and core inflation. In turn, we anticipate this will allow the Fed and other central banks to pause in 1H23," strategists including Marko Kolanovic and Nikolaos Panigirtzoglou wrote in a note on Monday.

In China, banks kept their main lending rates unchanged after the central bank paused its monetary easing and defended a weakening yuan.

In a time-tested harbinger of an economic downturn, short-term US rates have exceeded yields on longer maturities for months. The MLIV Pulse survey, which drew 737 responses, showed that the bulk of contributors expect a deeper inversion. Some see it reaching levels last seen in the early 1980s, when Paul Volcker ratcheted up borrowing costs to break the back of hyperinflation.

Elsewhere, Bitcoin struggled to return to $20,000 level. Oil slipped below $86 per barrel and gold was steady.

The majority of the MLIV survey's contributors say it's best to bet on dollar gains, and 44% prefer to sell stocks.

Key events this week:

  • US housing starts, Tuesday

  • EIA crude oil inventory report, Wednesday

  • US existing home sales, Wednesday

  • Federal Reserve decision, followed by a news conference with Chair Jerome Powell, Wednesday

  • Bank of Japan monetary policy decision, Thursday

  • The Bank of England interest rate decision, Thursday

  • US Conference Board leading index, initial jobless claims, Thursday

Some of the main moves in markets:


  • S&P 500 futures increased 0.1% as of 10:37 a.m. in Tokyo. The S&P 500 rose 0.7%

  • Nasdaq 100 futures gained 0.2%. The Nasdaq 100 climbed 0.8%

  • Japan's Topix index climbed 0.4%

  • South Korea's Kospi index added 0.4%

  • Hong Kong's Hang Seng Index rose 0.9%

  • China's Shanghai Composite Index increased 0.4%

  • Australia's S&P/ASX 200 Index surged 0.9%

  • Euro Stoxx 50 futures gained 0.3%


  • The Bloomberg Dollar Spot Index was steady

  • The euro rose 0.1% to $1.0031

  • The Japanese yen was up 0.1% to 143.06 per dollar


  • The yield on 10-year Treasuries dropped one basis point to 3.48%

  • Australia's 10-year yield was at 3.68%


  • West Texas Intermediate crude slipped 0.2% to $85.59 a barrel

  • Gold was at at $1,675.20 an ounce

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©2022 Bloomberg L.P.


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