Asian Stocks Gain After US Rallies, Yields Slide: Markets Wrap




  • In Business
  • 2022-10-03 23:26:33Z
  • By Bloomberg
 

(Bloomberg) -- Asian stocks gained in early trading following a rally in US shares and a surge in Treasuries as weak manufacturing data tamped down fears of more aggressive Federal Reserve rate hikes.

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Stocks rose in Australia and futures gained in Japan after the S&P 500 had its best day since July. Treasury yields fell across the board, with the 5-year rate dropping as much as 31 basis points after a US manufacturing gauge declined more than expected.

Traders pared bets on Fed hikes, with swaps tied to Fed policy meeting dates falling sharply for early 2023. The March meeting contract's rate dropped, suggesting a peak policy rate of 4.46% next year, down from recent highs above 4.60%.

In the latest sign the Fed's five rate hikes totaling 3 percentage points may be taking their toll, the Institute for Supply Management's gauge of factory activity fell to a more than two-year low. The Fed should consider stopping its tightening campaign after one more interest-rate ike in November, according to Ed Yardeni, a market veteran who coined terms like "Fed Model" and "bond vigilante."

US stocks rebounded on the first trading day of the month after the S&P 500 posted its worst September in two decades, a selloff driven by concern an overtightening Fed could tip the economy into a recession. More data due this week, notably the monthly payrolls report on Friday, should provide clues on how the job market is holding up.

Read more: Wall Street Capitulation Calls Get Ever Harder as Stocks Bounce

Fed speakers continued the drumbeat over rate hikes. New York Fed President John Williams said the US central bank has yet to raise interest rates to levels that are restricting economic growth, and tightening still has "significant" ways to go.

A rate decision in Australia will be a focus on Tuesday as traders return from long weekends in Sydney and South Korea, with New Zealand's central bank then meeting on Wednesday. China's onshore markets will remain shut this week for holidays, while the Hong Kong exchange will be closed Tuesday for the Chung Yeung Festival.

Traders will keep an eye on the geopolitical front after Japan warned residents that a North Korean missile was launched toward the northern part of the country.

Elsewhere, the dollar fell, and gold jumped on Monday. Oil rallied as potential OPEC+ output cuts heighten fears of supply tightness on the horizon. A final decision won't be made until ministers gather in Vienna on Wednesday.

Brazilian assets soared after President Jair Bolsonaro secured his way to a runoff election against Luiz Inacio Lula da Silva as investors cheered on the incumbent's better-than-expected showing and bet his leftist challenger will be forced to moderate his stances in the second stretch of the race. The real was the best-performing among the world's major currencies Monday.

Key events this week:

  • Eurozone PPI, Tuesday

  • US factory orders, durable goods, Tuesday

  • Fed's John Williams, Lorie Logan, Loretta Mester, Mary Daly speak at events, Tuesday

  • The Reserve Bank of Australia meets, Tuesday

  • 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

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 8:15 a.m. Tokyo time. The S&P 500 rose 2.6%

  • Nasdaq 100 futures climbed 0.2%. The Nasdaq 100 rose 2.4%

  • Australia's S&P/ASX 200 Index rose 2%

  • Nikkei 225 futures rose 1.7%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.1% to $0.9837

  • The Japanese yen was steady at 144.49 per dollar

  • The offshore yuan was little changed at 7.1031 per dollar

Cryptocurrencies

  • Bitcoin rose 0.1% to $19,622.20

  • Ether fell 0.4% to $1,319.04

Commodities

  • West Texas Intermediate crude fell 0.3% to $83.35 a barrel

  • Spot gold was little changed

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©2022 Bloomberg L.P.

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