Wed, October 26, 2022
Asian stocks edged higher on Wednesday as investors clung to hopes that the pace of U.S. and global rate hikes would begin to slow, although U.S. futures fell after disappointing results from tech giants Alphabet and Microsoft.
E-mini futures for the S&P 500 fell 1% in early trading after Google owner Alphabet posted weaker-than-expected ad sales after the bell and Microsoft missed forecasts expected earnings, possible early signs of a slowdown in the US economy.
Meanwhile, MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1%, led by a rebound in Hong Kong, while Japan’s Nikkei rose 1.1% by mid-morning.
Mainland China’s benchmark rose 1%, while Hong Kong shares rose 2%, attempting a fresh rebound after global investors worried about the direction of Chinese assets sold off on Monday. Beijing policy.
Xi Jinping’s new leadership team has raised fears that a more powerful Party leadership will increasingly prioritize the state over the private sector and keep strict zero-COVID policies in place. next year.
Tuesday’s U.S. economic data showed slowing house price growth and declining consumer confidence, with some signs that the Federal Reserve’s aggressive interest rate hikes are beginning to cool the housing market. work.
“Continuing the bad news (economic) theme is good news (for risky markets), US stocks continue to bask in the carryover from last Friday’s indices of a slowing pace of Fed tightening,” said Ray Attrill, head of FX Strategy at National Australia Bank in Sydney, said in a note.
Traders and economists are predicting another 75 basis point (bp) increase from the Fed next Wednesday, but the outlook is rising for a slowdown to half a point in December.
Treasuries rallied sharply overnight, with the yield on the benchmark US 10-year government debt falling more than 12 basis points. It was stable at 4.0937% on Wednesday.
In Australia, inflation hit its highest level in 32 years in the last quarter as the cost of housing construction and gas rose. The surprise added pressure on the central bank to reverse a recent dovish turn, although markets doubt there will be a drastic change.
Support for the Aussie dollar was weak and fleeting, leaving it more or less stable at $0.6386. Three-year Australian government bond futures hit highs but managed to hold steady for the day at 96.400.
In currency markets, the dollar flirted with a three-week low against its major peers, while the pound held near the six-week high reached on Tuesday after new British Prime Minister Rishi Sunak s is committed to bringing the country out of an economic crisis.
The pound last traded at $1.1445, down 0.19% on the day but not far off Tuesday’s high of $1.1500, a level last seen on Sept. 15.
The Japanese yen weakened 0.30% against the greenback to 148.39 to the dollar. The battered currency had hit a 32-year low of 151.94 on Friday, but fell after two bouts of alleged Bank of Japan intervention either side of the weekend.
Japanese government bonds rallied strongly after the Bank of Japan again said it would increase bond buying operations.
Oil prices fell as industry data showed U.S. crude oil inventories rose more than expected, heightening fears of a global recession that would reduce demand.
Brent futures for December fell $1.17, or 1.3%, to $92.35 a barrel at 0111 GMT, after climbing 26 cents in the previous session. U.S. West Texas Intermediate (WTI) crude futures for December delivery were down 88 cents, or 1%, at $84.44 a barrel.