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Asian Stocks Rise, US Futures Fall Amid Fed Focus: Markets Wrap

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(Bloomberg) — Asian stocks rose while US equity futures edged lower at the start of a pivotal week for investors that will see interest rate decisions from central banks including the Federal Reserve.

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Shares climbed in Japan, South Korea and Australia, while contracts for Hong Kong advanced earlier after stocks on Wall Street rallied Friday. The greenback made small advances against most major currencies, suggesting caution among traders.

The yield on the 10-year Treasuries was little changed around 4% amid concern that inflation will delay any shift by policy makers to slow aggressive rate hikes. A core gauge of US inflation accelerated in September, bolstering the case for another jumbo 75-basis-points move. Yields fluctuated in Australia.

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Economists surveyed by Bloomberg expect Fed officials will maintain their hawkish stance, laying the groundwork for interest rates reaching 5% by March 2023, potentially leading to a US and global recession.

“The question is does the narrative of front loading come to an end? I think that’s where the market’s waiting for this pivot,” Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg Radio. “I just think if the Fed can signal that they can go 75 and then they can slow down the pace of hikes, I think the market will be comforted by that.”

Still, Apple Inc.’s earnings report buoyed technology shares, helping the S&P 500 and the Nasdaq 100 notch their longest weekly rising streak since August. An index of Asian equities on Monday climbed for the fourth time in five days.

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Traders in Asia will also be watching for China’s official PMIs this session, which are projected to show a recovery struggling to gain traction.

Brazil’s local assets are set to weaken on Monday after Luiz Inacio Lula da Silva won the presidential election. The extent of the market drop will depend on whether President Jair Bolsonaro will concede, as a contested election would likely trigger larger losses.

Meanwhile, wheat soared after Russia exited a key agreement to allow Ukrainian crop shipments.

Oil headed for the first monthly advance since May ahead of output cuts by the OPEC+ alliance, which may tighten the market further.

Key events this week:

  • Companies reporting earnings this week include: Moderna, Pfizer, Airbnb, AIG, Maersk, Barrick Gold, BMW, Bharti Airtel, BP, ConocoPhillips, Estee Lauder, Ferrari, ING, Intercontinental Exchange, KKR, Mitsui, Newmont, Petrobras, Qualcomm, Restaurant Brands, Saudi Arabian Oil, SoftBank, Sony, Starbucks, Toyota, Uber and Yum! Brands.

  • China manufacturing and non-manufacturing PMI, Monday

  • Eurozone CPI and GDP, Monday

  • Reserve Bank of Australia policy decision, Tuesday

  • US construction spending, ISM manufacturing index, Tuesday

  • EIA crude oil inventory report, Wednesday

  • Federal Reserve rate decision, Wednesday

  • US MBA mortgage applications, ADP employment, Wednesday

  • Bank of England rate decision, Thursday

  • US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday

  • ECB President Christine Lagarde speaks, Thursday

  • US nonfarm payrolls, unemployment, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.2% as of 9:26 a.m. Tokyo time. The S&P 500 rose 2.5% Friday

  • Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 3.2%

  • Japan’s Topix index rose 1.1%

  • South Korea’s Kospi index rose 0.4%

  • Australia’s S&P/ASX 200 Index rose 1.1%

  • Hong Kong’s Hang Seng Index futures rose 0.9%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro was little changed at $0.9958

  • The Japanese yen fell 0.3% to 148.05 per dollar

  • The offshore yuan fell 0.3% to 7.2869 per dollar

Cryptocurrencies

  • Bitcoin fell 0.3% to $20,628.11

  • Ether fell 0.2% to $1,592.64

Bonds

Commodities

  • West Texas Intermediate crude rose 0.4% to $88.23 a barrel

  • Spot gold fell 0.1% to $1,642.91 an ounce

–With assistance from Garfield Reynolds.

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