(Bloomberg) -- Asian stocks extended a rally on Wednesday following the best two-day run for US equities in more than two years, as investors begin to anticipate a slowing to central bank tightening that could jolt risk assets higher.
Most Read from Bloomberg
Musk Revives $44 Billion Twitter Bid, Aiming to Avoid Trial
Loretta Lynn, Coal Miner's Daughter And Country Queen, Dies
Elon Musk Sets Off Uproar in Ukraine by Tweeting His 'Peace' Plan
Biden, Kishida Condemn North Korean Missile Launch Over Japan
Stock Shorts Fold in Best Two-Day Rally Since 2020: Markets Wrap
Hong Kong stocks jumped after a one-day break and Australian, Japanese and South Korean shares rose as improving risk sentiment drags global equities from oversold levels. US and European stock futures inched lower after the S&P 500 jumped 3.1% Tuesday and the Euro Stoxx 50 enjoyed its best day since March. Elon Musk revived his $44 billion bid for Twitter Inc., which soared 22%.
A decline in US job openings provided evidence the labor market may be cooling, offering hope the Federal Reserve may soon slow its rate-hiking path. Policy makers in Australia gave that view a boost on Tuesday by delivering a smaller-than-expected rate rise, though that move wasn't repeated Wednesday in New Zealand, where the central bank pushed its benchmark lending rate to the highest in seven years, as expected.
A Fed official speaking on Tuesday indicated further tightening ahead for the US central bank, dousing hopes that peak interest rates may be near.
"I don't think we're out of the woods yet," said Erin Gibbs, senior partner and chief investment officer of Main Street Asset Management, about the outlook for risk assets in an interview on Bloomberg TV. "I still think we could see some downward motion here."
"There are a lot more bonds for sale," Gibbs said. "That pushes prices down and yields up. That would make bonds more attractive than equities and put more and more headwinds on equities."
A Bloomberg index of the dollar steadied after falling 3% from a peak last week. The pound inched lower after climbing on Tuesday to the highest level in two weeks. The price of oil traded flat after jumping on Tuesday as OPEC+ said it was considering an output cut of as much as 2 million barrels a day, double prior estimates.
Investors will be keenly focused on Friday's US jobs data that economists anticipate is set to show a slowing in new jobs added.
"For the market to continue higher, the jobs data will have to be in-line with, or short of expectations," said Lindsey Bell, chief markets and money strategist at Ally. The market is currently anticipating a "goldilocks" labor-market report that's "not too hot and not too cold."
Key events this week:
Eurozone services PMIs, Wednesday
OPEC+ meeting begins, Wednesday
Fed's Raphael Bostic speaks, Wednesday
The Reserve Bank of New Zealand meets, Wednesday
Eurozone retail sales, Thursday
US initial jobless claims, Thursday
Fed's Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
US unemployment, wholesale inventories, nonfarm payrolls, Friday
BOE Deputy Governor Dave Ramsden speaks at event, Friday
Fed's John Williams speaks at event, Friday
Will earnings disappoint and push equities to new lows? This week's MLIV Pulse survey asks about corporate earnings. It's brief and we don't collect your name or any contact information. Please click here to share your views.
Some of the main moves in markets:
The S&P 500 futures fell 0.4% as of 10.35 a.m. in Tokyo. The S&P 500 added 3.1%
Nasdaq 100 futures fell 0.5%. The Nasdaq 100 gained 3.1%
Japan's Topix climbed 0.4%
Australia's S&P/ASX 200 added 1.5%
Hong Kong's Hang Seng index jumped 3.9%
South Korea's Kospi index added 0.3%
Euro Stoxx 50 futures fell 0.3%
The Bloomberg Dollar Spot Index traded flat
The Japanese yen climbed 0.2% to 143.88 per dollar
The offshore yuan traded flat at 7.0445 per dollar
The euro was flat at $0.9978
Bitcoin fell 0.5% to $20,232.45
Ether rose 0.5% to $1,354.77
The yield on 10-year Treasuries fell one basis point to 3.62%
Australia's 10-year yield fell seven basis points to 3.66%
Britain's 10-year yield declined nine basis points to 3.87%
West Texas Intermediate crude traded at $86.31 a barrel
Gold futures fell slightly to $1,720.42 an ounce
Most Read from Bloomberg Businessweek
Millions in Cryptocurrency Vanished as Agents Watched Helplessly
Pfizer Needs to Prove It's Ready to Move On From Covid-19
Maine Lobster Union Points the Way for Organizing Gig Economy Workers
Big Pharma Is Chasing a $55 Billion Prize of Safer Blood Thinners
The Unstoppable Dollar Is Wreaking Havoc Everywhere But America
©2022 Bloomberg L.P.