Asia Trade Raises Amid Upbeat Sentiment: Markets Wrapped


Asian markets will welcome Hong Kong’s return from the Lunar New Year holiday on Thursday amid a slightly positive tone for risk-taking, with a gauge of dollar strength near a nine-month low and some room for catch-up trading in stocks.

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(Bloomberg) — Asian markets will welcome Hong Kong’s return from the Lunar New Year holiday on Thursday amid a slightly positive tone for risk-taking, with some dollar strength near a nine-month low and some room for catch-up trading in shares.

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Stocks rose in Japan while U.S. futures rose. Markets in Australia are closed for a national holiday, as are those in India, which have been rocked by US short-seller Hindenburg Research LLC targeting Adani Group with accusations of manipulation and fraud. China’s markets remain closed.

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The Nasdaq Golden Dragon index of US-listed Chinese shares is up more than 1% so far this week, providing a tailwind for Hong Kong’s open. The MSCI Asia Pacific Index and the S&P 500 are also higher for the period.

Supportive sentiment in Asia, holiday travel and box office data in China also showed signs of recovery as people took advantage of Beijing’s pivot away from its Covid Zero policy.

The dollar’s weakness could also help the region, along with speculation that the Federal Reserve may be moving closer to pausing its rate hike cycle. The Bank of Canada, which led its global peers in raising rates quickly last year, has now signaled it will remain steady.

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Treasury has changed little in Asian trade. An auction of five-year Treasury notes extended a winning streak on Wednesday, reflecting strong investor appetite for U.S. government debt.

Holdings of bonds, particularly Treasuries, have become attractive again as either a hedge against recession, and/or to provide income, according to Marvin Loh, senior global macro strategist at State Street. “Locking in these returns is something that is ultimately attractive to a lot of investors who may have been short a lot of these securities after the volatility and the challenging world that we had last year,” he said on Bloomberg Television.

In the US stock market overnight, earlier losses were mostly recouped as attention shifted from Microsoft Corp. ‘s dire sales warning to Tesla Inc. ‘s earnings report after the closing bell.

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Elon Musk’s electric vehicle giant swung in late trading before gaining more than 5%. International Business Machines Corp. delivered a cheery annual sales forecast as it announced it would eliminate about 1.5% of its global workforce, following similar job cuts by many of its tech peers.

“The push-and-pull between bulls and bears continues, with technology earnings the latest data point to fuel the bears, although the positive momentum, continued high skepticism about the rally and the attractiveness of various parts of the markets could break out the upside,” says Mark Hackett, head of investment research at Nationwide.

The S&P 500 was headed for its best January since 2019, driven by expectations that the Fed will moderate its rate hikes. The stock rally came just as the economy was heading into a downturn — paving the way for a selloff, JPMorgan Chase & Co. Marko Kolanovic told CNBC.

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The New York Stock Exchange said a manual error that connected a backup system caused Tuesday’s wild price swings and trading halts for hundreds of company shares.

On the monetary front, the Bank of Japan released a summary of views from its latest board meeting, with one member saying it needs a policy review at some point in the future.

The yen led gains against the dollar among Group-of-10 currencies. Benchmark 10-year government bonds had yet to trade, with yields well below the BOJ’s 0.5% ceiling on Wednesday.

The won and the Kospi index were little changed after data showed South Korea’s economy shrank in the final quarter for the first time since the start of the pandemic on falling exports and consumer spending.

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Elsewhere, oil rose on bets of stronger Chinese demand and as a weaker dollar made commodities more attractive to many buyers. Gold cut higher.

Key events:

  • Earnings for the week include: American Airlines, Blackstone, Comcast, Diageo, Intel, LVMH Moet Hennessy Louis Vuitton, Mastercard, SAP, Southwest Airlines, Visa (Thursday); American Express, Charter Communications, Chevron, HCA Healthcare (Friday)
  • US fourth quarter GDP, new home sales, initial jobless claims, Thursday
  • US Personal Income/Spending, PCE Deflator, University of Michigan Consumer Sentiment, Pending Home Sales, Friday

Some of the major movements in markets:

Shares

  • S&P 500 futures were up 0.1% as of 9:33 a.m. Tokyo time. The S&P 500 was little changed
  • Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.3%
  • Japan’s Topix index rose 0.1%
  • South Korea’s Kospi index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0920
  • The Japanese yen rose 0.2% to 129.35 per dollar
  • The foreign yuan was little changed at 6.7672 per dollar

Cryptocurrencies

  • Bitcoin fell 2.6% to $22,978.67
  • Ether fell 1.8% to $1,588.71

Bonds

  • The yield on 10-year Treasuries fell one basis point to 3.44%

Commodities

  • West Texas Intermediate crude rose 0.3% to $80.42 a barrel
  • Spot gold has changed little

This story was produced with the help of Bloomberg Automation.

—With assistance from Rita Nazareth.

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