(Bloomberg) — Asian stocks rose after a rally in the world’s biggest technology stocks lifted global stocks to new highs ahead of U.S. inflation data due on Thursday.
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Stocks in Japan, Australia and China rose, echoing the bullish pulse on Wall Street on Wednesday. The S&P 500 and Nasdaq 100 gained more than 1% each, and a gauge of global stocks also rose, all to record highs, fueled by companies like Nvidia Corp. and Apple Inc., its longest winning streak since November.
Taiwan Semiconductor Manufacturing Co. traded at record levels after the sole supplier of Nvidia and Apple’s most advanced chips said second-quarter sales grew at the fastest pace since 2022. The iPhone maker said it aims to sell 10% more new devices after a bumpy 2023. In Asia, Sony Group Corp. and SK Hynix Inc. were among the top contributors to gains in the regional stock index.
“Markets remain remarkably calm despite this week’s deluge of data, including Fed Chairman Powell’s testimony, the CPI/PPI reports and the start of earnings season,” said Mark Hackett at Nationwide.
The so-called core CPI, which excludes food and energy costs and is seen as a better measure of underlying inflation, is expected to rise 0.2% in June for a second month. That would mark the smallest consecutive gains since August — a pace more acceptable to Fed officials.
“The June CPI report appears to be another ‘very good’ report that should boost the FOMC’s confidence about the path of inflation,” said Anna Wong of Bloomberg Economics. “This should set the stage for the Fed to begin cutting rates in September.”
Swaps are pricing in two Fed cuts in 2024 – and higher chances of the first coming in September.
The indicator of the dollar’s strength was little changed on Thursday, although the yen, Australian dollar and New Zealand dollar all rose against the greenback.
In Asia, investors will be watching for any impacts from the China Securities Regulatory Commission’s decision to tighten rules on short selling and high-frequency trading in a bid to crack down on inappropriate arbitrage and maintain market stability. Sentiment towards Chinese stocks has also deteriorated ahead of the country’s Third Plenum, which meets next week.
However, as Wall Street prepares for the consumer price index, Jerome Powell told Congress that the Fed does not need inflation below 2% before cutting rates and that policymakers still have more work to do. He noted that the job market has cooled “quite significantly.” Powell cited a “good path forward” on balance sheet flow and said commercial real estate does not threaten financial stability.
“The main takeaway from his testimony is that the Fed’s assessment of the balance of risks is changing in a way that – if supported and sustained by incoming data – will result in a rate cut in September,” said Krishna Guha of Evercore ISI.
Bank of England chief economist Huw Pill said on Wednesday that the timing of a rate cut was still an “open question”, prompting investors to scale back bets on an August reduction.
Elsewhere, the Bank of Korea kept its benchmark interest rate unchanged on Thursday as it looks for more evidence that inflation will continue to cool. Economic reports in Asia on Thursday include consumer confidence in Thailand and a monetary policy decision in Malaysia. Money supply and new loan numbers for China could also be released later today.
Australian and New Zealand bonds were little changed in early trading Thursday. Oil rose, while gold remained little changed after rising for a second session on Wednesday.
Main events this week:
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US CPI, initial unemployment claims, Thursday
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Fed’s Raphael Bostic and Alberto Musalem speak, Thursday
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China trade, Friday
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University of Michigan Consumer Sentiment, US PPI, Friday
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Earnings from Citigroup, JPMorgan and Wells Fargo, Friday
Some of the main movements in the markets:
Actions
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S&P 500 futures were down 0.1% at 10:37 a.m. Tokyo time
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Nikkei 225 futures (OSE) rose 0.6%
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Japan’s Topix rose 0.6%
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Australia’s S&P/ASX 200 rose 0.9%
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Hong Kong’s Hang Seng rose 1%
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The Shanghai Composite rose 0.4%
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Euro Stoxx 50 futures were little changed
Coins
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The Bloomberg Dollar Spot index was little changed
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The euro was little changed at $1.0836
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The Japanese yen was little changed at 161.61 per dollar
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The offshore yuan was little changed at 7.2887 per dollar
Cryptocurrencies
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Bitcoin rose 0.4% to $57,633.23
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Ether rose 0.1% to $3,099.22
Titles
goods
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West Texas Intermediate crude rose 0.8% to $82.73 a barrel
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Spot gold rose 0.2% to $2,375.02 an ounce
This story was produced with help from Bloomberg Automation.
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