A gauge of Asian stocks eased from its session highs, mirroring moves seen on Wall Street, as investors weighed a slowdown in US inflation ahead of the Federal Reserve’s policy decision.
(Bloomberg) — A gauge of Asian stocks eased from its session highs, mirroring moves seen on Wall Street, as investors weighed a slowdown in US inflation ahead of the Federal Reserve’s policy decision.
Shares in Japan, South Korea and Australia held advances of less than 1% while those in Hong Kong and mainland China fluctuated.
US equity futures rose about 0.2% in Asia after the S&P 500 closed off its intraday peak on Tuesday.
Investors are awaiting more clues on the Fed’s interest-rate path from the decision later Wednesday and Chair Jerome Powell’s briefing.
The dollar clawed back some of the ground it lost to its Group-of-10 counterparts Tuesday while emerging-market currencies strengthened versus the greenback.
The New Zealand dollar fell in a decline that accelerated after the government warned a recession was likely next year.
Treasuries were little changed after rallying Tuesday, when data showed Powell’s key measure of services prices excluding energy and rents moderated again in November.
While price pressures appear to have peaked, headline CPI remains above 7%, suggesting the Fed has more work to do to rein in inflation.
Australian bonds rose, led by the rate-sensitive three-year maturity.
“The market is now anticipating a slower pace of hikes and a moderation of the peak terminal rate in the US,” said Kellie Wood, deputy head of fixed-income at Schroders in Sydney.
“We believe the market is fully priced for this interest rate cycle given the level of inflation in the US economy.”
A dovish repricing swept across rates markets on Tuesday. With a half-percentage point move by the Fed notched in, wagers leaned toward a quarter-point increase as early as February.
Further out, swaps priced the peak Fed policy rate around 4.85% by May, down from almost 5% ahead of Tuesday’s inflation print. The current Fed policy range is 3.75% to 4%.
Elsewhere in markets, oil fell slightly ahead of the Fed decision and after rallying 6% over the previous two sessions.
Gold steadied near its highest level since July.
Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
Key events this week:
- FOMC rate decision and Fed Chair news conference, Wednesday
- China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday
- ECB rate decision and ECB President Lagarde briefing, Thursday
- Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
- US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.2% as of 12:15 p.m.
Tokyo time. The S&P 500 gained 0.7%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 advanced 1.1%
- The Topix Index rose 0.5%
- The S&P ASX Index rose 0.5%
- The Hang Seng Index rose 0.2%
- The Shanghai Composite Index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0625
- The Japanese yen was little changed at 135.51 per dollar
- The offshore yuan was little changed at 6.9637 per dollar
Cryptocurrencies
- Bitcoin rose 0.3% to $17,819.79
- Ether rose 0.2% to $1,322.6
Bonds
- The yield on 10-year Treasuries was little changed at 3.50%
- Australia’s 10-year yield declined four basis points to 3.36%
Commodities
- West Texas Intermediate crude fell 0.4% to $75.12 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Georgina Mckay and Stephen Kirkland.
More stories like this are available on bloomberg.com
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